Rahul Gandhi's attack on the government came after the RBI said that demand in the economy will take quite some time to mend

Congress leader Rahul Gandhi on Wednesday targetted the government over the state of the economy, stating that it needs to spend more and give additional money to the poor to restart the economy through consumption.

Sharing an Indian Express report, Gandhi said “distractions” through media won’t help the poor or make the “economic disaster disappear”.

“RBI has now confirmed what I have been warning for months. Govt needs to: spend more, not lend more,” Gandhi said. “Give money to the poor, not tax cuts to industrialists. Restart economy by consumption,” the former Congress chief tweeted.

RBI has now confirmed what I have been warning for months.

Govt needs to:
Spend more, not lend more.
Give money to the poor, not tax cuts to industrialists.
Restart economy by consumption.

Distractions through media won’t help the poor or make the economic disaster disappear. pic.twitter.com/OTDHPNvnbx

— Rahul Gandhi (@RahulGandhi) August 26, 2020

The latest salvo by Gandhi comes a day after the RBI indicated that the economy which is expected to contract for the first time ever, will take “quite some time to mend and regain” the pre-Covid momentum, as the “shock to consumption is severe” and the “poorest have been hit the hardest”. The RBI also cautioned about the loss of recovery momentum since June, with states imposing localised lockdowns.

The central bank has warned that high-frequency indicators so far point to a retrenchment in an activity that is unprecedented in history. Rating agencies and analysts have forecast a contraction of up to 20 per cent in the GDP in the first quarter of 2020-21 due to the lockdown induced by the Covid-19 pandemic.

According to the RBI, private consumption is expected to lead the recovery when it takes hold, and government consumption is expected to continue pandemic-proofing of demand. “Private consumption has lost its discretionary elements across the board, particularly transport services, hospitality, recreation and cultural activities,” the RBI said in its Annual Report for 2019-20.