FY 2020/21 was “the darkest year of the economy in four decades” – one that resulted in record negative growth and left “most Indians poorer than they were two years ago” – Congress MP P Chidambaram said Tuesday, shredding the government over its handling of the country’s finances.
Mr Chidambaram also slammed the government for misleading the people – a reference to the “green shoots” claims of the Finance Ministry in July last year, after the first wave peaked. He said the Congress had then called for measures like direct cash injections, but its pleas went unheard.
“2020/21 has been the darkest year of the economy in four decades. The performance in the four quarters tells the story… the first two witnessed a recession (-24.4 and -7.4 per cent)… performance in the third and fourth quarters did not herald a recovery,” Mr Chidambaram said.
He said (marginally) positive Q3 and Q4 rates – 0.5 and 1.6 per cent – should be seen in the context of “a very low base of 3.3 and 3.0 per cent in the corresponding quarters of the previous year”.
On Monday GDP numbers released by the National Statistical Office (NSO) showed the economy had contracted by 7.3 per cent over FY20/21– its worst performance in more than 40 years.
The Q4 numbers – 1.6 per cent growth – have been seen as disappointing because all sectors were open in the January-March period and the situation was as close to normal as things have been.
“When the first wave of the pandemic appeared to subside last year, the Finance Minister and her Chief Economic Adviser (K Subramanian) began to sell the story of a recovery. They saw ‘green shoots’ when no one else did. They predicted a V-shaped recovery…” Mr Chidambaram said.
“It was a false story and we had expressed our strong reservations, and warned there were no signs of a recovery. We pointed out the economy needed 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 a negative growth,” he said.
He also said falling per capita GDP – Rs 99,694 – a decline of 8.2 per cent from last year – led to “the deeply worrying conclusion that most Indians are poorer now than two years ago”.
Mr Chidambaram also flagged an “alarming” CMIE report on unemployment; the report says over one crore people have lost their jobs because of the second Covid wave, and 97 per cent of households’ income have declined since the pandemic hit India in January last year.
“The state of the economy is no doubt largely due to the pandemic, but it has been compounded by the ineptitude and incompetent economic management of the BJP-led NDA,” he said.
“If 2021/22 should not go as 2020/21, the government must wake up, admit its errors, reverse its policies and heed the advice of economists and the opposition,” Mr Chidambaram warned.