The Government’s stimulus package has come in for criticism from Opposition parties, economists and even from a section of industry. Former Finance Minister P Chidambaram dissected the stimulus in an e-mail interview to BusinessLine. Excerpts:
Would you hazard an estimate of whether the five-tranche package is over and above the expenditure of ₹30.4-lakh crore already earmarked for 2020-21? Or are we looking at a new Budget? Shouldn’t Parliament be looking at these estimates?
I plead for a new Budget effective June 1, 2020. The assumptions made while presenting the Budget on February 1 are no longer valid or relevant. It is axiomatic that any fiscal stimulus has to be over and above the budgeted level of expenditure of ₹30,42,230 crore. I think the need of the situation is an expenditure in the order of ₹40,00,000 crore. The revised estimate of revenues (tax, non-tax and capital receipts) may yield only ₹18,00,000 crore in 2020-21. The rest must be borrowed. Of course, Parliament and the Standing Committees concerned must scrutinise the new Budget, but let the government first say they will present a new Budget.
How would you characterise the transfer of ₹500 a month to 20 crore women with Jan Dhan accounts and five kg of rice or wheat plus one kilo of dal per family for three months since March? What would your prescription have been?
The government was throwing crumbs at the poor with its measly hand-outs. The scale of poverty and hunger, when daily wage earners lose their jobs or cannot get work because of the lockdown, is humongous. A family that survived on the daily earnings was overnight pushed into destitution. The government has treated such people with utter callousness and contempt. We had demanded cash (₹5,000-7,500) and grain (10 kg per person) transfers to the families in the bottom half of the population (13 crore families). That would have been my starting point and, as the lockdown was extended, renewed every month.
The figures for MGNREGA for April, 2020 show an 82 per cent drop in the number of workers finding employment from the previous year. A PIL has been filed by the Mazdoor Kisan Shakti Sangathan asking for full wages to be paid to 7.6 crore active job card holders. How do you analyse the government’s allocation of additional ₹40,000 crore for MGNREGA as also the announcement about future creation of Affordable Rental Housing Complexes (ARHC) in urban areas for migrants, ration card portability, etc?
Cash transfers to poor families, free grain for a few months and MGNREGS will take care of the bulk of the poor. I welcome the additional allocation of ₹40,000 crore for MGNREGS in 2020-21 but this will not be enough. MGNREGS, as conceived, is a demand-driven programme but this government has lost sight of that fundamental characteristic of MGNREGS. So, if people want more work, more days of work must be provided and more money must be allotted. Ration card portability is an extension of EPF portability, mobile number portability, Aadhaar portability and so on. It is welcome. The Affordable Rental Housing in big cities for migrant workers under PPP is a five-year plan! The government does not have an Aladdin’s lamp to magically create thousands of units of housing overnight. Just ask a builder in Mumbai how long it takes from conception to completion of a housing project, not counting time wasted in litigation. This announcement of the FM was a jumla.
Would the MSMEs be encouraged to take on additional borrowings in the light of the promise of collateral free loans and credit guarantees amounting to over ₹3-lakh crore? The word after the last tranche briefing was that it is not a “revival package” but a “survival package”...
It is neither a survival package nor a revival package. Remember, the collateral-free loan facility backed by a credit guarantee, was offered to only 45 lakh MSMEs and that too with riders on the number of employees and level of wages. What about the remaining 5.8 crore MSMEs that employed nearly 9-10 crore workers? They have been left high and dry and many thousands will close down permanently.
You’ve said the measures announced thus far do not amount to a stimulus package. What, in your opinion, would constitute a sufficient stimulus given the extent of the crisis?
The Indian economy had slowed down for 7+1 (Jan-March 2020) quarters when the lockdown was imposed. In answer to question 1, I had said that only a level of central government expenditure of ₹40,00,000 crore in 2020-21 would have been sufficient. Besides, the States would also need to spend more.
The FRBM ceiling has been relaxed with conditionalities and a number of States have already complained that it amounts to no relaxation. How real do you think are the States’ concerns about the Centre imposing a fiscal Emergency?
That suspicion is growing every day. The Centre has reduced the states to begging for funds, including their legitimate and constitutional dues. Many states have run out of cash and their revenue sources have dried up by as much as 90 per cent. What is the Centre’s intention? Is it bona fide or is there a hidden agenda? Only time will tell.
The opposition parties have had a meeting; what would be the common grounds for future strategy?
There is a great degree of commonality in the views of the Opposition parties. At the end of the meeting, they issued a statement and raised 11 demands. The statement and the demands reflect the reality and the imperatives of the grim situation in the country.
The one area where the Government has acted is the arrests and detentions in cases related to anti-CAA protests and the Delhi riots. Do you think academics, intellectuals, students, activists are being targeted?
There was never any significant intellectual content in the BJP. The sole purpose for which the RSS floated its political wing was to promote the Hindutva agenda and capture political power. I admit they have succeeded to a considerable degree.
The BJP leaders (with exceptions like Atal Bihari Vajpayee) have always been uncomfortable with universities, writers, economists, professors, historians etc. When in power, they use their power to undermine established institutions (JNU, AMU, Jamia Millia, Jadhavpur) and target individuals (too many to list here). Look at the witch-hunt launched in the wake of the anti-CAA-NRC-NPR protests. Look at the on-going vendetta against JNU and Jamia Millia students. Look at the number of left-leaning intellectuals and writers thrown in prison in the name of anti-Maoist drive. Look at the number of journalists who have been ‘punished’ for writing and speaking against the RSS-BJP. Look at the unprecedented denial of human rights in Jammu & Kashmir since August 5, 2019. And draw your own conclusions.