New Delhi: Taking a dig at the Central Government over the decline of Gross Domestic Product, veteran Congress leader and former Union Finance Minister P Chidambaram asked the Government to borrow money or print banknotes but spend it aggressively without worrying about the fiscal deficit.
The National Statistical Office released GDP figures showing that the country's economy has been contracted by 7.3 percent over FY 2020-21, which is the worst performance in the past four decades.
Terming it the "darkest year" in four decades, Chidambaram explained, "The first two quarters witnessed a recession (-24.4 and -7.4 percent). While the performance in the third and fourth quarters did not herald a recovery. The estimated rates of 0.5 percent and 1.6 percent were due to a very low base of 3.3 and 3.0 percent in the corresponding quarters of the previous year. Besides, these rates come with a number of caveats."
Also read: GDP data: Indian economy shrinks 7.3% in FY21, worst in four decades
He also slammed the Government saying, "When the first wave of the pandemic appeared to subside last year, the Finance Minister and her Chief Economic Advisor began to sell the story of recovery. They saw “green shoots” when no one else did. They predicted a V-shaped recovery. It was a false story and we had expressed our strong reservations and warned there were no signs of a recovery."
"We had pointed out that what the economy needed was a strong dose of stimulus, including increased government expenditure, direct transfers of cash to the poor and liberal distribution of free rations. Our pleas fell on deaf ears, and the result is negative growth of (-) 7.3 per cent," he further added.
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Chidambaram asserted that what happened in 2020-21 should not be repeated in 2021-22. He said the Government must wake up, admit its errors of commission and omission, reverse its policies and heed the advice of economists and the Opposition.
The former Finance Minister alleged that the Government has ignored good advice by distinguished economists and renowned institutions have been rebuffed so far.
"We may note that Nobel Laureate Abhijit Banerjee has called for printing money and increasing spending. Yet, even as recently as yesterday morning, the Finance Minister gave a long interview to some newspapers defending her misguided and disastrous policies," he said.
Replying to a question over this matter, Chidambaram said, "This is not the time to worry about the fiscal deficit. So what if the deficit widens to 6.5%? We can’t lose another year like we lost the last year. But the way the government is reacting, we are going to lose another year. My advice to the government is to act boldly and spend. Borrow or print money and spend."
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