Economy

Opposition slams FM’s fresh package, says not enough for recession-hit economy

Our Bureau New Delhi | Updated on November 12, 2020

Former Finance Minister P Chidambaram

Congress leader Jairam Ramesh   -  THE HINDU

Asks Centre to provide more funds to States

The Opposition termed the Centre's fresh announcements for the economy as yet another attempt to manage the headlines when the country's economy has officially slipped into recession. The Congress said on Thursday that the Centre’s announcements are not enough for a recession-hit economy. The Left said the crisis of the people is a crisis for survival.

Congress leader and former Finance Minister P Chidambaram and senior party MP Jairam Ramesh told reporters here at a press conference that the package is to manage the headlines as the RBI formally said that the country's economy has entered into recession.

Chidambaram said there is adequate or more liquidity but the issue is money is not flowing into the hands of various sections of people as there is no demand. “What you need to address is the capacity of people to spend,” Chidambaram said. He said the FM addressed a number of programmes for capital expenditures. He said none of the additional allocation will be spent before March 31 as there is a cap on fourth quarter expenditure imposed by the Department of Expenditure.

Ramesh said all the announcements came with a number of conditions which cannot be met. “There will be no impact of the mini budget this year. Only time will tell whether it can have any impact next year,” Ramesh added.

Chidambaram said for the first time since data was recorded methodically the Indian economy has gone into a recession, as defined by economists. “In Q2 of 2020-21, according to the RBI, the quarterly economic growth rate is expected to decline by -8.6 per cent. A negative growth rate in two successive quarters is a recession,” he said.

No signs of growth

He said it was surprising that the Finance Minister quoted the RBI as predicting that the economy will register a positive growth rate in the third quarter. “Nearly one-and-a half months of the third quarter is already over and there are no signs that the growth rate will turn positive in the third quarter. The Congress party has repeatedly emphasised the steps that need to be taken to revive the economy,” he said and maintained that farmers must get fair and remunerative prices for their produce.

“Only a small fraction gets MSP. The recent farm Bills have put even that in jeopardy. Government has done nothing to ensure that farmers get fair prices. The very poor are outside the formal economy. There are millions who have lost their jobs and livelihoods. Unless money is put in their hands, they will not be able to contribute to the revival of demand and the consequent revival of the economy. It is absolutely necessary that a scheme like NYAY must be implemented," he said.

He alleged that the Centre is starving the state governments of funds and doling out measly sums of money. “Unless more money is devolved on to the States, the States will curtail capital expenditure in 2020-21 and the revival of the economy this year will be a pious wish,” Chidambaram said.

The polit bureau of the Communist Party of India (Marxist) said after the GDP plummeted by 23.9 per cent in April-June quarter, it has now further fallen by 8.6 per cent in the quarter ended September 2020. “This continuous contraction of the GDP is destroying lives, livelihoods, pushing crores of our people into poverty, hunger and deprivation. It is no longer a crisis of livelihood: it is a crisis of survival. This colossal destruction of the Indian economy by the Modi government’s policies can only be checked by substantially hiking public investments to build our much-needed infrastructure, generating a large number of jobs, leading to boosting domestic demand. This is the only way to begin any economic revival,” the party said.

Published on November 12, 2020

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