Govt should print money, increase spending: Chidambaram

Tribune News Service
New Delhi, June 1

Former finance minister and Congress veteran P Chidambaram on Tuesday said that India had recorded negative annual growth for the first time since 1979-80 and asked the government to print money to enhance liquidity and spending.

In a statement, Chidambaram said there are no surprises in the note issued by the National Statistical Office on the provisional estimates of Annual National Income for 2020-21.

“As expected, the GDP at constant prices recorded a negative growth of (-) 7.3 per cent, the first time India has recorded negative annual growth since 1979-80. Three numbers of GDP at constant prices will highlight the parlous state of the economy: 2018-19: Rs 140,03,316 crore; 2019-20: Rs 145,69,268 crore; 2020-21: Rs 135,12,740 crore. The increase in 2019-20 was modest at 4.0 per cent, but the decline in 2020-21 was severe at -7.3 per cent. The net result is that the GDP in 2020-21 is lower than the GDP of two years ago (2018-19). 2020-21 has been the darkest year of the economy in four decades,” the ex-minister said.

He said the first two quarters of 2020-21 witnessed a recession (-24.4 and -7.4 per cent).

“The performance in the third and fourth quarters did not herald a recovery. The estimated rates of 0.5 per cent and 1.6 per cent were due to a very low base of 3.3 and 3.0 per cent in the corresponding quarters of the previous year,” he added.

Chidambaram also noted that when the first wave of the pandemic appeared to subside last year, the Finance Minister and her Chief Economic Adviser began to see “green shoots” when no one else did.

“They predicted a V-shaped recovery. It was a false story and we had expressed our strong reservations and warned there were no signs of a recovery. We had pointed out that what the economy needed was a strong dose of stimulus, including increased government expenditure, direct transfers of cash to the poor and liberal distribution of free rations. Our pleas fell on deaf ears, and the result is negative growth of (-) 7.3 per cent,” the Congress leader said.

He described as “most worrying” that the per capita GDP fell below Rs 1 lakh, to Rs 99,694.

In percentage terms, it is a decline of (-) 8.2 per cent over the previous year. It is lower than the level achieved in 2018-19 (and maybe even 2017-18), Chidambaram said.

He concluded that most Indians today were poorer than they were two years ago abs though the current state of the economy is largely due to the impact of the pandemic, it has been compounded by the "ineptitude and incompetent" economic management of the BJP-led NDA government.

“Good advice by distinguished economists and renowned institutions has been rebuffed. World-wide experience has been ignored. Suggestions on fiscal expansion and cash transfers have been turned down. Hollow packages like Atmanirbhar have fallen flat, Chidambaram rued.

The ex-minister sought fiscal expansion, including cash transfers to the poor citing research of Aziz Premji University that 23 crore people have been pushed below the poverty line and into indebtedness.

Chidambaram said as advised by Nobel Laureate, Dr Abhijit Banerjee, the government should print money and increase spending.