Economy Perilously Close To Collapse, Being Attended By Incompetent Doctors: P Chidambaram
Former Finance Minister P Chidambaram on Monday tore into Narendra Modi government's handling of the economy, saying it was "perilously close to a collapse" and was being attended to by "incompetent doctors".
The economy, he said, was facing twin problems of rising unemployment and falling consumption but the government continues to live in denial.
Initiating the debate on the Union Budget for 2020-21 in the Rajya Sabha, Chidambaram said more money needs to be put in hands of people and not give "extraordinary powers" to junior taxmen to unleash "tax terrorism."
He offered Finance Minister Nirmala Sitharaman the same advice that Modi as BJP's prime ministerial candidate had offered him in November 2013.
On "November 2, 2013, a very distinguished political leader said and I quote: "Economy is in trouble. The youth wants jobs. Devote more time to the economy, not on petty politics. Please focus on the job at hand. Very wise advice. I can't do anything better than reading this piece of advice to the Finance Minister", he noted.
According to him, the economy was facing structural problems but the government continues to believe they were cyclical in nature.
Modi government's chief economic adviser for four years, Arvind Subramanian, has stated that the economy is in the Intensive Care Unit. But "I would say the patient has been kept out of the ICU and incompetent doctors are looking at the patient," Chidambaram said.
"It is dangerous to have a patient out of the ICU and being looked upon by incompetent doctors. What is the point standing around and chanting slogan 'Sab ka Saath, Sab ka Vishwas'," he said.
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According to Chidambaram, the Bharatiya Janata Party government lives in denial, refuses to acknowledge its mistakes and has an "outdated" predisposition towards protectionism and a strong rupee, and is against bilateral as well as multilateral trade agreements.
"We have an economy which is perilously close to collapse. It has to be attended to by very competent doctors. In the last few years, we have found the doctors are not so competent," he said.
We are living in denial and we are ignoring two big elephants in the room -- one is rising unemployment and the other is fall in consumption. Unemployment rises, consumption falls, the Indian economy becomes poorer and not richer.P Chidambaram, Former Finance Minister
Chidambaram called demonetisation of old 500 and 1,000 rupee notes as well as the hurried implementation of a "flawed" Goods and Services Tax with wrong design, rates, structure and procedure and an unprepared system as "monumental blunders" that ruined the economy.
"Because of its refusal to admit mistakes, because it lives in denial, because of its predisposition, the government either does not know or if it knows is not willing to make it clear that this is the state of the economy," he said.
With an unprecedented six consecutive quarters of falling growth, the economy is facing demand constraints and is investment-starved, he said. “When we point out the mistake of the government, the government must have an open mind to debate and if it is a mistake, admit it."
"It is living in denial. It simply does not accept that the state of the economy is extremely bad," Chidambaram said as he reeled out the government's own statistics to drive home the point.
While GDP has fallen to an 11-year low of 4.5 percent in 2019 July-September quarter, agriculture is growing by just 2 percent, while consumer price inflation has risen from 1.9 percent in January 2019 to 7.4 percent in a matter of 11 months.
Also, food inflation is at 12.2 percent. Bank credit is growing 8 percent with non-food credit rising by 7-8 percent and credit to the industry by just 2.7 percent. Credit to agriculture has declined from 18.3 percent to 5.3 percent and that for MSMEs from 6.7 percent to 1.6 percent, he said.
"Who are your doctors?, I want to know," he said, adding the government considers Congress as an untouchable and does not think of any good about the rest of the Opposition and so doesn't consult them.
Chidambaram charged that instead of putting money in the hands of people, the Modi government "puts money in hands of 200 corporates" by way of cut in corporate tax.
Stating that every competent doctor that the Modi government could ever find has left the country, he listed out former RBI governors Raghuram Rajan and Urjit Patel, former CEA Arvind Subramanian and former NITI Aayog Vice Chairman Arvind Panagariya as persons who quit during the BJP rule.
"Fear and uncertainty prevail in the country," he added. Chidambaram also attacked Sitharaman for reading out a 160-minute speech without talking about the state of the economy and its management.
"Question on my mind is what was the Finance Minister trying to say? If you take 160 minutes to read the speech and still few pages are left to read, what is the narrative, what is the story you are trying to say,” said Chidambaram.
Chidambaram said overall industrial index showed just 0.6 percent growth with every major industry being at either near-zero or in the negative zone. Thermal power plants are operating at just 55 percent of the capacity as factories have either closed or are on the verge of closure, he added.
"That gives you a good picture of the state of the economy. You don't require a MRI," he said. "You are in management for six years. How long can you blame previous managers," he added.
Further, Chidambaram said the government was burying unfavourable reports such as the labour survey that put unemployment at 45-year high of 6.1 percent at the end of 2017-18. As also the one that talked of consumer expenditure falling to 3.7 percent between 2011-12 and 2017-18, he noted.