New Delhi: A day after Reserve Bank of India (RBI)'s monthly bulletin showed the contraction of GDP growth to 8.6 per cent in the second quarter, the Union Finance Minister on Thursday announced new stimulus package 'Aatmanirbhar 3.0', with a set of measures for Indian economy.
However, Congress party claimed that the Indian economy has gone into a recession and the announcement of the stimulus package is just another attempt of BJP-led Central Government of "Headline Management".
While addressing a virtual press conference, former Finance Minister and Congress senior leader P Chidambaram said, "For the first time in the history of independent India, our economy has gone into a recession, as defined by economists. In Q2 of 2020-21, according to RBI, the quarterly economic growth rate is expected to decline by -8.6 per cent. A negative growth rate in two successive quarters is a recession."
He explained that in the first quarter of 2019-20, the growth rate was 5.2 per cent and in the first quarter of 2020-21, it was -23.9 per cent. Similarly, in the second quarter of 2019-20, the growth rate was 4.4 per cent and in 2020-21, it is expected to be -8.6 per cent.
"There is nothing to be pleased about these rates, it means that we are still unable to catch up with even the tepid growth rates recorded in 2019-20. I am afraid the remaining quarters of 2020-21 will also record negative growth rates," Chidambaram said.
During the announcement of the stimulus package, the Finance Minister also presented the state of the economy by saying that active recovery is happening in the country which Chidambaram called "surprising".
Also read: FM Nirmala Sitharaman announces stimulus package 3.O
He said that the Finance Minister quoted RBI while predicting that the economy will register a positive growth rate in the third quarter whereas nearly one and half months of the third quarter is already over and there are no signs that the growth rate will turn positive.
Meanwhile, Congress senior leader and former Union Minister Jairam Ramesh also took a jibe at FM, saying, "To hide this news of GDP contraction, another explosion of headline management, 'Aatmanirbhar 3.0' has been announced today by Finance Minister. What will be the effect? Only time will tell. But it seems to be aimed at downplaying the RBI report on the economy getting into recession."
"I think it is not going to make much difference. This year has gone, what will happen next year, only time will tell. But Central Government is not paying attention to the basic problems relating to farmers, Ministry of Micro, Small and Medium Enterprises (MSMEs), financial conditions of states and it's consequences will be more serious for our country," he further added.
Center announced a stimulus package worth Rs 2.65 lakh crore, which amounts to the 15 per cent of India's GDP. This amount also includes the Production Linked Incentive scheme, which was announced on November 11.
"The economy continues to be in dire straits and the government does not have a plan to revive it. On the other hand, it is busy deflecting the attention of people from the economy relating issues and managing the headlines," Chidambaram alleged.
In a series of suggestions to revive the economy, the Congress leader said, "Farmers must get fair and remunerative prices for their produce. For the very poor outside the formal economy and for the millions who have lost their jobs and livelihoods it is absolutely necessary that a scheme like NYAY must be implemented. As far as the formal economy is concerned the government has done nothing to bring back lost jobs or to create new ones."
Also read: Indian economy witnessing strong recovery: Sitharaman
He also mentioned about the financial crisis of states, saying, "It is feared that state government will cut their capital expenditure by nearly Rs 2.7 lakh crore. The Centre is starving state governments of funds and doling out measly sums of money. Unless nominees devolved on states, they will curtail the capital expenditure in 2020-21. the revival of the economy this year will be a pious wish."
Earlier today, Congress leader Rahul Gandhi also targeted Prime Minister Narendra Modi over the RBI report, alleging that his policies have turned India's strength into its weakness.
