Economy is on brink of stagflation: Congress

Economy is on brink of stagflation: Congress

The Congress leader also raised questions over the absence of Finance Minister Nirmala Sitharaman from a pre-budget meeting organised by NITI Aayog and wondered if the meet chaired by Prime Minister Narendra Modi was "just an eye wash".

Ahead of the Union Budget, the Congress on Monday accused the government of doing little to put the country's economy in order and warned that it was on the brink of stagflation.

Party spokesperson Supriya Shrinate said the country's economy needed the attention of the government as the world was watching it closely.

"We are at the brink of stagflation; we are at the risk of stagnating economy slipping into stagflation and I say that with full responsibility," she said.

Noting that the government had done precious little for the country's economy, she said, "Indian economy needs utmost attention of the government. It has to be prepared and which is why the world will watch."

Shrinate said the Union budget was being presented at a time when the country was already in a slowdown and she added that even though the government was in denial mode Indian economy was at the verge of slipping into stagflation.

Shrinate claimed the only thing consistent about this government was the deteriorating quality of budgets over six years.

"We sincerely hope the budget this year will have proposals that have been thought through and will not half-baked ones which will be rolled back one after another like last year. Investors like predictable policy environment. The budget needs to outline vision over medium to long term and not adopt the mask tape approach the government has consistently resorted to," she said.

The Congress leader also raised questions over the absence of Finance Minister Nirmala Sitharaman from a pre-budget meeting organised by NITI Aayog and wondered if the meet chaired by Prime Minister Narendra Modi was "just an eye wash".

"Curiously enough, the prime minister met top industrialists 10 days before the budget. What was the purpose of this meeting, was this just an eyewash? Because at this late stage could their suggestions have been included in the budget given that most of the exercise was over by then? Ironically, Nirmala Sitharaman who will be presenting the budget was conspicuously absent from these meetings," she said.

She said the year 2020 holds little promise given the precarious state of India's economic situation. With the GDP growth at under 6 per cent and inflation close to 7.5 per cent the time for empty talk is over, she said.

The government continued to be in denial and slowly, what was essentially a demand problem, was turning into a supply issue as well, she said, noting that the Indian economy can ill afford to bear this double whammy.

The Congress seeks to shift the focus back on the basic issues concerning the people, Shrinate said, adding that it will hold a series of press conferences across the country to highlight the government's failures on the economic front.

Senior Congress leaders, including party leader Rajeev Gowda and a panel of spokespersons, will hold a press conference on January 31 to speak on the Economic Survey presented that day.

Former finance minister P Chidambaram will make a critical analysis of the Union Budget on February 1.

"The budget needs to incentivise investment which will put the virtuous cycle of job creation and consumption back in motion," she said.

Noting that exports are reducing, she said no country can grow at a high rate without strong exports which have continued to consistently decline for five straight months. There has to be a clear strategy to boost exports, which is a job intensive space, she noted.

Claiming that the consequences of stagflation are precarious, she said it will fuel inflation and give rise to fiscal deficit which will also aggravate acute rural stress. Together all of this will further dampen consumption, the leader said, adding that, "this vicious cycle of downward economic spiral is worrisome for India".