Former finance minister P Chidambaram. (Express photo/File)
Former finance minister P Chidambaram on Monday hit out at the Centre saying three of the four tyres of the country’s economy viz. exports, private investment and private consumption have been punctured. Attacking the government’s flagship projects, demonetisation and the Goods and Service Tax (GST), said that both the exercises have had an adverse impact on the economic health of the country and that there is widespread anger among people owing to this.
Here is all that Chidambaram said
1. RBI’s Consumer Confidence Survey
Chidambaram said the RBI’s Consumer Confidence Survey (May 2018) found that 48 per cent of people felt that economic conditions had worsened in the last one year. “The survey is unlikely to have covered the most backward parts of the country or the most deprived sections of the people. Therefore, the number of 48 per cent will be actually higher,” he said.
2. Farm prices and MSP
“Farmers’ despondency has turned into anger and farmers have come to the streets to protest. The principal reasons are uneconomic prices for farm produce and stagnant wages of farm labour. For the few crops that have an MSP, the MSP is not adequate and the annual increases have been niggardly. Every farmer knows that the promise of MSP = Cost + 50 per cent is a jumla,” he said.
3. Rising fuel prices
Launching an attack over the rising fuel prices, Chidambaram said, “There is widespread anger about the artificially fixed prices of petrol, diesel and LPG. There is absolutely no reason why the prices should be higher today than what they were in May-June 2014. It is nothing but a case of fleecing the helpless consumer.”
4. Joblessness
Raising the issue of unemployment, the former finance minister said, “Joblessness is rampant. The only reliable data is the quarterly survey of the Labour Bureau. Those numbers reveal that a few thousand jobs are created — or added — every quarter. That is a far cry from the 2 crore jobs a year that was promised as part of achhe din.” He also questioned the Centre as to why the Labour Bureau Survey for Oct-Dec 2017 has not been released.
Taking a jibe over the “pakora jobs” remark of Prime Minister Narendra Modi, Chidambaram said, ” There is great ferment in campuses across the country because young men and women know that there will be no jobs when they graduate. So far, nobody has bought the innovative idea that ‘frying pakoras is also a job’.”
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5. Punctured tyres of economy
Chidambaram also added that three of the four tyres of economy have been punctured. “Firstly, exports – the growth rate in the last four years has been negative. Secondly, private investment is in the the doldrums, if not dead. Capital Formation (GFCF) is stuck at 28.5 per cent for three years. Lastly, private consumption which was limping until a few months ago, has a mild uptick. The only tyre that seems to be inflated is government expenditure, but here too the government’s options are getting limited because of the pressure on the current account deficit (CAD) and the fiscal deficit (FD).”
6. Growth rate declined post-demonetisation
Talking about the much-hyped note ban exercise of the Modi govt, Chidambaram said, “The adverse effects of demonetisation have been established beyond doubt. The growth rate has declined from 8.2 per cent in 2015-16 to 6.7 per cent in 2017-18 —exactly 1.5 per cent as I had predicted and endorsed by Dr Manmohan Singh.” ” The Tamil Nadu government has officially acknowledged that 50,000 SME units were shut down in the State in 2017-18; 5,00,000 jobs were lost; and capital investment in the SME sector declined by Rs 11,000 crore. Exports from Tiruppur declined from Rs 50,000 crore to Rs 36,000 crore in 2017-18. Multiply that several times for the whole country, and you will get an idea of the devastation wrought by demonetisation,” he added.
7. ‘Flawed GST continues to haunt trade and business’
Chidambaram, who has been a vocal critic of the NDA’s implementation of the Goods and Service Tax, said, “GSTR Form 2 (for input tax credit) and GSTR Form 3 (for net tax liability) have not been notified so far. Tax liability is being calculated on the temporary GSTR Form 3B, which is illegal. Refunds of thousands of crore rupees have been held up putting businesses, especially exporters, in jeopardy.”
8. Gross NPAs have risen in last four years; Banks Board Bureau is an utter failure: Chidambaram
Gross NPAs have risen in the last four years from Rs 2,63,000 crore to Rs 10,30,000 crore and will rise more. No bank is willing to lend a big-ticket loan. Credit growth to industry in the last four years was 5.6, 2.7, -1.9 and 0.7 per cent. The Banks Board Bureau (BBB) is an utter failure. Government cannot find the additional money to recapitalise banks.
9. Inflation
Referring to the recent hike in the RBI repo rate, Chidambaram said, “Inflation expectations are high. Interest rates will rise throwing more burden on consumers and producers.”
10. Social security schemes ignored, says Chidambaram
Adding that the government has repeatedly neglected social security laws and programmes, Chidambaram said the Health Protection Scheme announced by the Centre in its budget is “another jumla”. “The Food Security Act has not been implemented. MGNREGA is no longer demand-driven, wage arrears have mounted. Crop insurance covers barely 30 per cent of farmers, it is a windfall for insurers,” he said