GDP estimates a matter of shame for Modi government, says Chidambaram

Chidambaram said the “economic tragedy” was foretold by many close observers of the Indian economy, most recently by the RBI in its annual report released a few days ago.

Former finance minister P Chidambaram on Monday said the GDP estimates should be a matter of “surprise and shame” to the government that was seeing ‘green shoots’ on several days during the first quarter and did nothing to cushion the fall by taking suitable fiscal and welfare measures.

Former finance minister P Chidambaram said the Congress and other opposition parties had warned and urged the government to take preventive and pre-emptive measures to revive the economy.(HT PHOTO.)

“But we know that the Modi government has no shame and will not acknowledge its mistakes. All these had been anticipated,” Chidambaram said, addressing a joint virtual press conference with party colleague Supriya Shrinate after the provisional estimates of GDP were released for the quarter April-June 2020.  

India’s GDP shrank by the steepest ever 23.9% in the April-June period as the coronavirus-induced lockdowns battered an already slowing economy, according to data released by the National Statistical Office (NSP).

Chidambaram said the Congress and other opposition parties had warned and urged the government to take preventive and pre-emptive measures. “Our pleas fell on deaf ears. The country, as a whole, is paying a heavy price, the poor and the vulnerable are in despair. It is only the Modi government that was nonchalant and uncaring. The government peddled a fake narrative, but that narrative has been exploded today by the estimates,” he added.

The senior Congress leader said the GDP in the first quarter has declined by a whopping 23.9%. “That means, about one quarter of the gross domestic output as on June 30, 2019 has been wiped out in the last 12 months. Another way of looking at it is, since the end of 2019-20, the gross domestic output has fallen by about 20%.”

Chidambaram said the only sector that has grown is agriculture, forestry and fishing at 3.4%.

“The Finance Minister (Nirmala Sitharaman) who blamed an ‘Act of God’ for the economic decline should be grateful to the farmers and the gods who blessed the farmers,” he said.

Chidambaram said every other sector of the economy has declined sharply, some precipitously as manufacturing is down 39.3%; construction by 50.3%; and trade, hotels, transport and communications by 47.0%.

“The estimates do not come as a surprise to us. They should be a matter of surprise to the government that was seeing ‘green shoots’ on several days during the first quarter. They should also be a matter of shame to the government that did nothing — literally nothing — to cushion the fall by taking suitable fiscal and welfare measures,” he said.

Chidambaram said the “economic tragedy” was foretold by many close observers of the Indian economy, most recently by the RBI in its annual report released a few days ago.

RBI had pointed out the contraction in the first half of 2020 is widely regarded as deeper and more destructive than the Great Depression and the Global Financial Crisis (of 2008), he added.

“Turning to India, high frequency indicators that have arrived so far point to a retrenchment in activity that is unprecedented in history; the total stimulus package (liquidity and fiscal measures) for G-20 countries averaged 12.1% of GDP (5.1% of GDP for EMEs and 19.8% of GDP for AES); the shock to consumption is severe, and it will take quite some time to mend and regain the pre-Covid-19 momentum; and a majority of respondents reported pessimism relating to the general economic situation, employment, inflation and income,” he said.

“Let me say with regret: it will take many months before the economy turns the corner and registers positive growth. The inaction and ineptitude of the government gives us no hope that we will see light at the end of the tunnel at any time soon,” Chidambaram further said.