Darkest year of economy in four decades, says former Finance Minister P Chidambram

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Congress leader P Chidambaram on Tuesday said that the financial year 2020-’21 was the “darkest year of the economy in four decades”. The former finance minister’s comment came a day after government data showed that India’s Gross Domestic Product growth rate for the last fiscal year contracted by an unprecedented 7.3%.

Though the economy grew by a higher-than-expected 1.6% in the fourth (January-March) quarter, Chidambaram refused to read much into that.

“The performance in third and fourth quarters [of the financial year] did not herald a recovery,” Chidambaram said at a virtual press briefing. “The estimated rates of 0.5% and 1.6% were due to a very low base of 3.3% and 3% in the corresponding quarters of the previous year. These rates come with a number of caveats.”

The Congress leader also pointed out that the country’s gross domestic product in actual terms had in fact fallen from Rs 140 lakh crore in 2018-’19 to Rs 135 lakh crore in 2020-’21. He also said that the per capita GDP had declined 8.2% as compared to the last year, leaving individuals poorer than they were two years ago.

“The current state of the economy is no doubt largely due to the impact of the [coronavirus] pandemic, but it has been compounded by the ineptitude and incompetent economic management of the BJP [Bharatiya Janata Party]-led NDA [National Democratic Alliance] government.

The Congress leader once again made a case for cash transfers to the poorer sections, suggesting that the free ration being provided to them by the Centre currently translates to only Rs 32 per month for a beneficiary. The Congress has been constantly demanding for a monthly cash transfer of Rs 3,000 for the poor.

Chidambaram said that the government should increase spending and should even consider printing more money to meet the need.

“Nobel laureate Dr Abhijit Banerjee has called for printing money and increasing spending,” Chidambaram said. “We have the space and the sovereign right to print money and if at any point the government feels that too much money is being printed, it can always stop printing.”

The former Union minister said that the government should “reverse its policies”, flagging recent reports from the Reserve Bank of India and the Centre for Monitoring Indian Economy on demand situation and unemployment in the country.

In its monthly bulletin for May, the central bank said that the biggest toll of the second wave of the coronavirus pandemic can be felt on demand and employment. On the other hand, private think-tank CMIE recently said that over one crore Indians lost their jobs due to the second wave.

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