NEW DELHI: Former Finance Minister and senior Congress leader P. Chidambaram on Tuesday said that 2020-21 has been the darkest year of the economy in four decades and that the government should print more money if necessary as suggested by several economists, including Nobel Laureate Abhijit Banerjee.
"We may note that Banerjee has called for printing more money and increasing the spending, though Finance Minister Nirmala Sitharaman in her recent interviews to various newspapers defended the government's misguided and disastrous policies."
Earlier addressing a press conference, Chidambaram virtually attacked the government over the GDP numbers.
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He said, "As expected, the GDP at constant prices recorded a negative growth of (-) 7.3 per cent, the first time India has recorded negative annual growth since 1979-80.
"2020-21 has been the darkest year of the economy in four decades. The performance in the four quarters of 2020-21 tells the story. The first two quarters witnessed a recession (-24.4 and -7.4 per cent). The performance in the third and fourth quarters did not herald a recovery.
The estimated rates of 0.5 per cent and 1.6 per cent were due to a very low base of 3.3 and 3.0 per cent in the corresponding quarters of the previous year. Besides, these rates come with a number of caveats, " the senior Congress leader added.
Chidambaram alleged that when the first wave of the Covid pandemic appeared to subside last year, the Finance Minister and her Chief Economic Adviser began to sell the story of a 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 a negative growth of (-) 7.3 per cent."
What is most worrying is that the per capita GDP has fallen below Rs 1 lakh, to Rs 99, 694. In percentage terms it is a decline of (-) 8.2 per cent over the previous year. It is lower than the level achieved in 2018-19 (and maybe even 2017-18). The deeply worrying conclusion is that most Indians are poorer than they were two years ago.
Good advice by distinguished economists and renowned institutions has been rebuffed. World-wide experience has been ignored. Suggestions on fiscal expansion and cash transfers have been turned down. Hollow packages like Atmanirbhar Bharat have fallen flat.
We are glad that the two leading chambers of business and industry -- CII and FICCI -- have, in the last few days, echoed our views and pleaded for fiscal expansion, including cash transfers to the poor.
The RBI's monthly review has flagged the 'demand shock' and its consequences.
The CMIE report on loss of jobs and growing unemployment is alarming. The research and survey reports of Aziz Premji University have concluded that 23 crore people have been pushed below the poverty line and into indebtedness.
The second wave of the pandemic is upon us. So far, it seems to be following the same pattern as the first wave, except that it has wrought more damage in terms of numbers of infections and deaths.
If 2021-22 should not go the same way as 2020-21 did, the government must wake up, admit its errors of commission and omission, reverse its policies and heed the advice of economists and the Opposition.