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Package just 0.91 per cent of GDP, revise it: P Chidambaram

Our Bureau New Delhi | Updated on May 18, 2020 Published on May 18, 2020

File Photo of senior Congress leader P Chidambaram   -  The Hindu

Congress has calculated that the entire financial package announced by the Centre is worth Rs. 1,86,650 crore or 0.91 per cent of the GDP, said former Finance Minister P Chidambaram.

Speaking to reporters here on Monday, he contested Prime Minister Narendra Modi's claim that the fiscal stimulus will be ten per cent of the country's GDP.

The Congress has also decided to start political action to compare the promises made by the Centre and its delivery. Chidambaram said his party will reach out to other Opposition leaders to put the pressure on the Centre so that parliamentary scrutiny of the package could be done at the department related standing committees.

Chidambaram said about a dozen items such as revenue lost due to tax concessions, Pradhan Mantri Garib Kalyan Package, additional allocation for medical and health infrastructure, EPF support for businesses and workers, reduction of EPF rates, free food grain for migrant workers for two months, interest subsidy for MUDRA Shishu loans , additional credit through KCC and additional allocation for MGNREGS qualify as fiscal stimulus measures entailing additional expenditure over and above the amount of Rs 30,42,230 crore in the expenditure budget for 2020-21. "The rest of the announcements included already budget expenditure, front loading of some budgeted expenditure, regulatory measures, a number of liquidity measures, medium to long term plans/schemes, and proposed reforms," he said.

He said there can be no fiscal stimulus to the economy without additional expenditure over and above the budgeted expenditure. "We note that FM acknowledged that Additional Expenditure must be financed by Additional Borrowing. The true value of the fiscal stimulus package will, therefore, be known when we know what is the Additional Borrowing in 2020-21 to finance the Additional Expenditure over and above the Expenditure Budget of Rs 30,42,230 crore. The truth cannot be hidden for long," he said.

The Rajya Sabha MP said fiscal stimulus of Rs 1,86,650 crore amounting to barely 0.91 per cent of GDP will be totally inadequate given the gravity of the economic crisis and the dire situation in which people find themselves.

"Most analysts, rating agencies and banks have placed the size of the fiscal stimulus at between 0.8 to 1.5 per cent. We also note, with deep regret, that the fiscal stimulus package has left several sections high and dry, including (1) the bottom half of the population (13 crore families); (2) migrant workers; (3) farmers; (4) landless agricultural labour; (5) daily wage non-agricultural labour; (6) workers who have been laid off or retrenched; (7) workers in unorganized or unregistered businesses/units who have lost their jobs; (8) self-employed who have no work; (9) 7 crore shopkeepers; (10) lower middle class families who have run out of cash and are forced to borrow; and (11) 5.8 crore MSMEs," he added.

Expressingdisappointment, he requested the government to reconsider the stimulus package and announce a revised and comprehensive fiscal stimulus package of not less than Rs 10 lakh crore of real Additional Expenditure equivalents to 10 per cent of GDP.

Published on May 18, 2020

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