New Delhi May 23rd
The Reserve Bank of India should “bluntly tell the government to do your duty (and) take fiscal measures” to protect and re-start a national economy battered by the coronavirus outbreak, Congress leader P Chidambaram said this morning.
He also hit out at Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman, urging them to rethink the Rs 20 lakh crore relief package that “has fiscal stimulus of less than 1 percent of GDP”. The government has described the package as being worth 10 percent of the GDP.
“Governor Shaktikanta Das says demand has collapsed, growth in 2020-21 headed toward negative territory. Why is he then infusing more liquidity? He should bluntly tell the government ‘Do your duty, take fiscal measures’,” the veteran Congress leader said.
“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 GDP?” he asked.
The former Finance Minister’s comments came a day after the RBI said GDP could contract further than it has this year and “is estimated to remain in negative territory” in the next.
On Friday, RBI Governor Shaktikanta Das – in his first address since Finance Minister Nirmala Sitharaman revealed details of the government’s Rs 20 lakh crore stimulus – announced a 40 basis point reduction in the repo rate, dropping it from 4.4 percent to 4 percent
The reduction, coupled with an extension of moratorium on loan repayments till August, is expected to infuse liquidity into an economy struggling to create demand.
P Chidambaram has been among the most vocal critics of the government’s Rs 20 lakh crore fiscal stimulus package, arguing that it “has left several sections high and dry”.