Chidambaram on negative growth: The darkest year of Indian economy in four decades

A day after India’s GDP recorded negative growth and severe decline at 7 per cent, former Finance Minister and senior Congress leader P Chidambaram blasted the Modi government for “ineptitude and incompetent economic management”.

Terming the negative growth of the GDP as “the darkest phase of the economy in last four decades” Chidambaram on Tuesday said, “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”.

Slamming Finance Minister Nirmala Sitharaman and the Chief Economic Advisor, Krishnamurthy Subramanian for creating false impressions regarding the “recovery”, Chidamabram said, “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,” added the former Finance Minister while addressing a virtual press meet.

Analysing the data (of negative growth) released by the Central government on Monday, Chidambaram exclaimed, “The deeply worrying conclusion is that most Indians are poorer than they were two years ago.”

Saying that most of the economic indicators such as private consumption, gross fixed capital formation (GFCF), exports, imports have gone from bad to worse, the senior Congress leader added, “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 have fallen flat.”

Supporting demand for fiscal expansion put forth by two leading chambers of business and industry - CII and FICCI, including cash transfers to the poor, the former Finance Minister said, “We may note that Nobel Laureate, Dr 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.”