State of economy worrisome; a re-set of economic policies may be necessary, says Chidambaram

Underscoring that the current state of the economy is worrisome and a cause of extreme concern, senior Congress leader and former finance minister P Chidambaram said that after 30 years of liberalisation in 1991, it is felt that taking into account global and domestic developments, it may be necessary to contemplate a re-set of the economic policies.

Clarifying that he wasn’t talking about a rethink of the liberalisation ushered in by former prime minister PV Narasimha Rao and the then finance minister Manmohan Singh, Chidambaram asserted that the re-set of economic policies must also address the questions of rising inequalities; extreme poverty among the bottom 10% of the population. India’s rank in the Global Hunger Index 2021 is 101 out of 116 countries and there is evidence of widespread nutritional deficiency among women and children.

Chidambaram said a slower rate of growth has been the "hallmark" of the present government in the last eight years, and the post-pandemic recovery has been "indifferent and halting". He added that the consequences of the poorly-drafted and unfairly-implemented GST laws implemented by the Modi government in 2017 are visible to everyone.

Inflation has risen to unacceptable levels, and threatens to rise further. WPI (Wholesale Price Index) inflation is at 14.55% and CPI (Consumer Price Index) inflation is at 7.79%. “The government is actually fueling the rise of inflation by its wrong policies, especially through high taxes on petrol and diesel, high administered prices and high GST tax rates,” asserted Chidambaram.

The country reaped enormous benefits in terms of wealth creation, new businesses and new entrepreneurs, a huge middle class, millions of jobs, exports and lifting 27 crore people out of poverty during a 10-year period of UPA rule, pointed out Chidambaram, who heads the panel on economy at the Nav Sankalp Chintan Shivir at Udaipur in Rajasthan.

“A comprehensive review would also be justified by the health and education outcomes as revealed by the Annual State of Education Report 2021 (ASER 2021) and the National Family Health Survey-5 (NFHS-5). We believe that a re-calibration of economic policies can influence health and education outcomes,” added Chidambaram.

Congress, highlighted Chidambaram, is in favour of an increase in social services expenditure of the government. “We reiterate our charge that social services expenditure as a proportion of total expenditure has fallen to an average of 5% (in 8 years) from an average of 9 per cent in the 10 years between 2004 and 2014. In the run-up to the 2019 Lok Sabha elections, the party had proposed in its manifesto that they would implement a NYAY (Nyuntam Aay Yojana), which guaranteed a cash transfer of Rs 72,000 per year to five crore families who constitute the poorest 20% of India.

Highlighting the various problems ravaging the country, Chidambaram said the job situation is at its worst. The Labour Force Participation Rate (LFPR) is at a historic low of 40.38% and the unemployment rate stands at 7.83%.

The senior leader said that since 2019, the number of vacancies in the union government has only increased as no recruitment has happened in the various branches of the government including Railways and Armed Forces. The Congress had promised in its manifesto to fill all vacancies in the Central government in 2019.

“If you don’t fill the government vacancies, where will the young people of the country find jobs. The government has downed its shutters and this is a terrible onslaught on young men and women of the country. This is anti-youth, anti poor, anti scheduled caste and anti-scheduled caste,” observed Chidambaram.

“We believe that we must prepare the Indian economy and the Indian workforce to adapt to the ways in which industry, business and trade will be conducted in the 21st century with the greater use of automation, robotics, machine learning and artificial intelligence,” reiterated Chidambaram.

The senior leader said the time is ripe for a comprehensive review of Centre-States fiscal relations especially because the fiscal position of the states is fragile as never before and needs urgent remedial measures. There is a complete breakdown of trust between Centre and state trust and even the BJP finance ministers who attend the GST council say this.

There is Rs 78,704 cr GST pending from union government to states as of March 31, and the government should pay it timely, noted Chidambaram. “The Congress wants the GST compensation period, which is set to end by June 30, 2022, to be extended by at least another three years. We are against any attempt to rail road the GST council which is likely to recommend extension of the term,” remarked Chidambaram.

Underscoring that Congress doesn’t wish or fear a situation like Sri Lanka’s economic downturn to happen in India, Chidambaram observed that the democratic rights of the people should not be curtailed.

While agreeing that the Congress party should sharpen its communication, Chidambaram said it is also for the people to decide what was important for them; whether hunger and unemployment and widespread nutritional deficiencies afflicting more than 50% of the population was more important than loudspeakers, halal or jhatka meat. He reiterated he didn’t understand why the choices were between polarisation and economic growth of India’s families. People should consider the extreme poverty and growing inequalities and inability to afford even some basic things.