2020-21 darkest year of economy in four decades: Chidambaram


New Delhi, Jun 1 (IANS): 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.

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.

 

  

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Comment on this article

  • Arthur, Mangalore

    Wed, Jun 02 2021

    Demonetization and the poorly implemented GST have damaged the Indian economy more than all the scams of Congress. Read Pratap Bhanu Mehta new column in the Indian Expess for a sharp analysis of the Indian economy. Here is an excerpt. "We do not have authoritative consumption-based poverty figures since 2011. But Azim Premji University’s “State of Working India” report, 2020, estimated that almost 230 million Indians had fallen back into poverty. For reference, the period of growth from 2000 to 2016 had seen roughly 270 million lifted out of poverty. A new Pew Research Centre Report, published before the second wave lockdown, suggested that the Indian middle class had shrunk by about 32 million people in 2020. And we don’t have serious numbers on shrinking incomes or on the possible effects of long-term morbidity. This number could get worse."

    DisAgree [1] Agree [1] Reply Report Abuse

  • Naveen, Netakere

    Tue, Jun 01 2021

    Chidambaram and few Sr Sr most congress bigwigs remained as congress mouth piece, who looted country for decades, stacked money outside the country. This Chiddu or many congress and fake Gandhi chelas never in their wildest dream thought of remained out of power and also indication is clear that they are standing on lose stand, power is far from their sight. congress is celebrating when TMC , CPM, DMK is winning means congress is no more a big player in Indian politics. Better dissolve congress and change the name like restaurants are doing when management changes to attract customers. Lol

    DisAgree [10] Agree [2] Reply Report Abuse

  • Deshbhakt, Mangalore

    Tue, Jun 01 2021

    Naveen'reg 15 Laksha thikki lekka thojundu

    DisAgree [1] Agree [4] Reply Report Abuse

  • roy Indian, Mangalore

    Tue, Jun 01 2021

    economy don't not fall dear. politician and ruling party make it to fall. and show it has economy has fall and start taking money from poor . simply it is rich and big business people kept there money safe and they don't want to invest now because of pandemic . and even politician . if CBI raid all the politician even modi. Indian people will be rich within fore night . all this fund can be put for the development of India . that time India will reach in 2100 year in future .

    DisAgree [4] Agree [2] Reply Report Abuse

  • vasu, Mangalore

    Tue, Jun 01 2021

    The country chose health over economy this year. It is a choice we made. If you take US for example they did not make a clear choice and they have 600 K deaths with less then 1/5th of our population.If we had chosen health then we would have had at least 4 to 5 Mn deaths if you take population density and other factors. We had one of the strictest lock downs. Please stop this advise.

    DisAgree [11] Agree [3] Reply Report Abuse

  • Sangram Sangam, Kundapur

    Tue, Jun 01 2021

    People never ever forget UPA 1 and UPA 2 govt 1.86 lakhs crores looted in Coal mining scam 1.70 lakhs crores looted in 2G 70000 crores in comnwealth game's How any country survive this type of huge scam happens May be above scames are biggest in the world

    DisAgree [10] Agree [6] Reply Report Abuse

  • David Pais, Mangalore

    Tue, Jun 01 2021

    ಹ್ಹಹ್ಹಹ್ಹ ಹ್ಹಹ್ಹಹ್ಹ.... ರಫೇಲ್ 1 is enough corrupt brhasta jumla party.

    DisAgree [2] Agree [8] Reply Report Abuse

  • David Pais, Mangalore

    Tue, Jun 01 2021

    ಡಿಮೋನಿಟ್ಯಾಝ್ ಮಲ್ತದ್, ಊರು ತಿರ್ಗದ ಖಜಾನೆ ಖಾಲಿ ಮಲ್ತೆ ಚಾಯವಾಲೆ.

    DisAgree [4] Agree [10] Reply Report Abuse

  • Felix Pinto, Koteshwara

    Tue, Jun 01 2021

    Under the pandemic situation, what else did you expect PC? Do you think things would have been better if you were at the helm? The thieves who stole thousands of crores of rupees from us, don't have the moral grounds to talk about poor economy and negative GDP.

    DisAgree [5] Agree [4] Reply Report Abuse

  • Charles D'Mello, Pangala

    Tue, Jun 01 2021

    "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.",.....Many of those who clapped when BJP came to power are feeling the pain in their hands now.

    DisAgree [1] Agree [6] Reply Report Abuse

  • Alwin, Mangaluru

    Tue, Jun 01 2021

    A person who rules should not weep mock blame but govern. Governance is not drama but to take country and people forward. All government since independence faced sever problems.

    DisAgree [1] Agree [1] Reply Report Abuse

  • Ben D'Souza Prabhu, Mangalore, Bombay Bandra now in Canada

    Tue, Jun 01 2021

    A Valuable Suggestion from our Well Known Ecconomist and Financial Expert, Mr Chidambaram is worth considering at a time we are strugling in every field now. Trust, our Government Officials will take a clear note and message and act accordingly, keeping aside our Political preferences. Hope, our Caring Almighty will enlighten them all. THANK YOU !!!

    DisAgree [7] Agree [7] Reply Report Abuse

  • Bhavya Baliga, Udupi

    Tue, Jun 01 2021

    Wah!! What a discovery!!

    DisAgree [10] Agree [10] Reply Report Abuse

  • Charles D'Mello, Pangala

    Tue, Jun 01 2021

    Facts and the discovery are different.

    DisAgree [2] Agree [1] Reply Report Abuse

  • Alphy, Mumbai

    Tue, Jun 01 2021

    Yes Bhavya... Bhakt's refuse to see the truth and you are one of them. Live in the world of lies till it hits you like a Tsunami. Our Stock market is totally rigged. There is always a correlation between the countries GDP, Economic health and the stock market. our economy is in doldrums and our GDP is tanked - worst in decades, so stock market doesn't reflect the truth. You can take the truth or leave it.

    DisAgree [2] Agree [2] Reply Report Abuse

  • Sameer, Riyadh

    Tue, Jun 01 2021

    BJP will say 'Sab changa si'...

    DisAgree [10] Agree [6] Reply Report Abuse

  • Jossey Saldanha, Nallasopara

    Tue, Jun 01 2021

    India has gone behind 1947 ...

    DisAgree [13] Agree [13] Reply Report Abuse


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