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The Congress, criticising Union Finance Minister Nirmala Sitharaman’s stimulus announcements, said on Monday that extra spending to boost demand and the increase in States’ capital expenditure are paltry and untimely. “This is yet another indication that the Modi government is at its wits’ ends when it comes to managing the economy,” said party spokesman Gourav Vallabh.
‘Belated realisation’
Addressing reporters, he said Sitharaman gave a new definition for “stimulus” and claimed that the economy cannot be ordered or swayed by headlines.
He said the announcement was a belated realisation that consumer demand needs to be stimulated, something that the Congress and “almost every other sensible economist have clamoured for, over the last six months”.
The Finance Minister first announced a hastily designed economic package that has had no impact, Vallabh claimed. “It was also a clear admission that the much hyped ₹20-lakh crore Atmanirbhar plan announced by the Prime Minister in May is a dismal failure in protecting and reviving India’s ravaged economy. But evidently lessons from that experience have not been learnt yet. Just because the PM or the FM call these measures an economic stimulus does not mean the economy will obey and get stimulated. The economy cannot be dictated to or swayed by headlines” he said.
Instead of looking at the demand side, the Centre focussed on credit expansion and debt restructuring Vallabh said and asked why the Centre was oblivious to the demands of the industry to rationalise GST rates to boost demand for some items like two-wheelers.
The ₹12,000-crore to States for capital expenditure is a no more than a lame joke on the economy, he said. “What effect will a 1.33 per cent increase in capital spending by States have on the economy?,” he asked.
‘Unlikely to spend’
He said in the stimulus, the Finance Minister essentially ordered government employees how to spend their own money and called it a “stimulus for demand”. “The FM forgot the most basic lesson about money – it is fungible. Whether it is called LTC or festival advance, money is money for the individual. Unless there is additional money, the individual is not going to spend more. So, where is the question of a demand stimulus?” he asked.
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