FM's Budget will be a conjurer's illusion: Chidambaram

FM Sitharaman's FY22 Budget will be a conjurer's illusion: Chidambaram

“Before you celebrate double-digit growth, remember that you had a more than double-digit decline,” Chidambaram said

Former Finance Minister P Chidambaram. Credit: PTI Photo

Days before Finance Minister Nirmala Sitharaman’s Budget presentation, Congress on Thursday presented a grim picture of the state of the economy and predicted a “painful recovery from recession”.

Addressing a press conference here, Congress leaders P Chidambaram, Mallikarjun Kharge and Jairam Ramesh alleged that Nirmala would present “dressed up” Revised Estimates for 2020-21 to build up an attractive narrative for the coming fiscal.

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"We are afraid that the FM will present a dressed-up Revised Estimates for 2020-21 and attempt to build an attractive narrative for 2021-22," Chidambaram said, reading out a party statement at the press conference with senior Congress leaders Jairam Ramesh and Mallikarjuna Kharge by his side.

“The Revised Estimates for 2020-21 will be a set of false numbers and, therefore, the Budget Estimates for 2021-22 will be a conjurer’s illusion,” Chidambaram said.

He dismissed the BJP’s glee about IMF chief economist Gita Gopinath’s forecast of double-digit growth for the Indian economy in 2021-22.

"The conclusion of a recent study by Brookings using IMF and World Bank data is humiliating but not surprising at all: the biggest rise in poverty will be in India and India will overtake Nigeria and become the country with the largest number of poor people," Chidambaram said, adding that this "is the contribution of the Modi government at the end of seven years".

“Before you celebrate double-digit growth, remember that you had a more than double-digit decline,” Chidambaram said, adding that the IMF had forecasted that the Indian economy would reach pre-Covid level only by 2025.

"Looking ahead, we do not see a 'V' shaped recovery. We believe that the recovery, slow and painful, will still leave millions of households struggling to survive and it will resemble more the letter 'K'. As a result, inequality will increase. Those who are behind will be pushed back further," he said.

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He said the Congress believed that the economy was in a recession, the recovery will be slow and painful, and the “rate of GDP growth in 2021-22 (in constant prices) will be modest – no more than 5%”.

"Even without the pandemic, the economy would have continued on the downward path that had begun in the first quarter of 2018-19 and continued for eight successive quarters. The pandemic pushed the economy into an abyss -- minus 23.9 per cent in Q1 of 2020-21 and minus 7.5 per cent in Q2," he said.

The Congress prescribed a large fiscal stimulus to the economy to trigger demand and a rescue plan for MSMEs to revive closed units as a means to stem the decline and accelerate recovery.

Chidambaram also demanded that the government should make direct cash transfers to 20-30% of the families at the bottom of the economy at least for a period of six months.

“We think that the list we have presented is doable by competent economic management. But whether this government has the wisdom and competence, only you can say and the people will say,” Chidambaram said.

He said the finance minister has the distinction of presiding over the first recession in four decades. 2020-21 will end with negative growth and none of the numbers estimated at the beginning of the year will be achieved, Chidambaram claimed.

He said the revenue targets will be missed by a large margin, capital investment will take a hit, the revenue deficit will be close to 5% and the fiscal deficit will exceed 7%.

“There is no point in wasting time over the budget of 2020-21. It was a disaster at the start and will be a catastrophe at the end of the fiscal year,” he said.

The Congress also called on the government to abandon protectionist policies, re-engage with the world, enter into bilateral trade agreements with as many countries as possible and remove the bias against imports.

"By a stroke of good fortune, if even a part of the agenda that we have set out is accepted by the government (and we do not crave any acknowledgement), we shall be happy and relieved for the sake of the people of India," Chidambaram said.

 

(With PTI inputs)