Former Finance Minister P Chidambaram on Tuesday threw his weight behind the suggestion offered by some experts that the government must print money to boost spending as a measure to tide over the economic crisis.
“Yes, if necessary, the government must print money. We have the space and the sovereign right to print money. If at any point the government feels that too much money has been printed, it can always stop. At this moment, printing money is clearly advised,” Chidambaram said at a press conference.
“We may note that Nobel Laureate Dr Abhijit Banerjee has called for printing money and increasing spending,” he said.
Noting that the country has recorded negative annual economic growth for the first time since 1979-80, Chidambaram said the 7.3 per cent decline in GDP in 2020-21 proves that the government’s theory that there would be a V-shaped recovery of the economy was a false story and the current state of affairs has to do with the ineptitude and incompetent economic management of the BJP-led NDA regime.
“When the first wave of the pandemic appeared to subside last year, the Finance Minister and her Chief Economic Adviser began to sell the story of a recovery. They saw ‘green shoots’ when no one else did. They predicted a V-shaped recovery. It was a false story and we had expressed our strong reservations and warned there were no signs of a recovery,” Chidambaram said.
He said it was pointed out to the government that what the economy needed was a strong dose of stimulus, including increased government expenditure, direct transfers of cash to the poor and liberal distribution of free rations. “Our pleas fell on deaf ears, and the result is a negative growth of 7.3 per cent,” he said.
The veteran Congress leader said the deeply worrying conclusion of the per capita GDP falling below Rs one lakh to Rs 99,694 is that Indians are poorer than they were two years ago.
“The current state of the economy is no doubt largely due to the impact of the pandemic, but it has been compounded by the ineptitude and incompetent economic management of the BJP-led NDA government,” Chidambaram said the good advice given by distinguished economists and renowned institutions has been rebuffed, and world-wide experience has been ignored.
He said the government turned down suggestions on fiscal expansion and cash transfers, while its “hollow packages” like Atmanirbhar have fallen flat.
Chidambaram was extremely critical about Finance Minister Nirmala Sitharaman’s manner of holding the GST council meeting, saying she treated the members of the panel with disdain and contempt. “She heard them, but finally took no decision. She appointed a Group of Ministers to recommend reduction of GST on COVID-related medicines and equipment. That decision should have been taken right there and then. The GoM will give its report on June eight. This is called procrastination,” he said.
The former FM said the Centre should immediately clear the GST dues of the states since they need money to carry out the COVID-19 vaccination programme.