Former Finance Minister and senior Congress leader P Chidambaram said that the RBI should “bluntly tell the government” to “do their duty and take fiscal measures” as the economy was headed towards a recession.
His comments came after the RBI governor Shaktikanta Das’s grim announcement on 22 May, where he said India’s GDP would be in the negative in 2020-21, as the pandemic had halted all economic activities.
In his address – the first one since the unrolling of Finance Minister Nirmala Sitharaman’s Rs 20 lakh crore stimulus package – Das announced a 40 basis point reduction in the repo rate, dropping it from 4.4 per cent to 4 per cent.
In a series of tweets, Chidambaram asked why the RBI was injecting more liquidity if the economy is headed towards a negative GDP.
He also criticised the Centre’s Rs 20 lakh crore “Atmanirbhar” package and asked, “Even after RBI’s statement, is the PMO or Nirmala Sitharaman lauding themselves for a package that has fiscal stimulus of less than 1 percent of the GDP?”
The Centre’s Rs 20 lakh crore relief package is said to be valued at 10 percent of India’s GDP but many agencies and banks have disputed that calculation and said that the direct fiscal reforms add up to around a mere 1 percent of the GDP at best.
Chidambaram, too, has been a quite stern critic of the relief package. In previous tweets he had said, “The fiscal stimulus package is not for Rs 20 lakh crore. It is only for Rs 1,86,650 crore.”
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)