P Chidambaram slams govt, asks why RBI is infusing liquidity

Former Union Finance Minister and senior Congress leader P Chidambaram, on Saturday, slammed the central government and questioned why the Reserve Bank of India (RBI) is infusing more liquidity as the growth in financial year 2020-21 is headed towards negative territory.

In a series of tweets, Chidambaram said, "RBI Governor says demand has collapsed, growth in 2020-21 headed toward negative territory. Why is he then infusing more liquidity?"

The former Minister in next tweet also said that Shaktikanta Das should bluntly tell the government -- "Do your duty, take fiscal measures".

"Even after RBI's statement, is the Government or Finance Minister (Nirmala Sitharaman) lauding themselves for a package that has fiscal stimulus of less than 1 per cent of gross domestic product (GDP)?" he said.

Slamming the Rashtiya Swayamsewak Sangh (RSS), Chidambaram said, "RSS should be ashamed of how the government has dragged the economy into negative growth territory."

His remarks came a day after the RBI delivered an emergency rate cut for the second time in as many months on Friday as it judged that the COVID-19 pandemic poses a grave threat to the country and will lead to the first economic contraction in 40 years.

Das on Friday announced a 40 basis points (bps) cut in repo and reverse repo rates, while markedly pivoting the central bank's focus from inflation control to fostering growth. Das pledged to take whatever "measures are necessary" to meet the challenges posed by the pandemic.

He also said that India's GDP growth rate for the financial year 2020-21 is likely to be in the negative territory.