Chidambaram wants RBI to pull up Govt.

Chidambaram wants RBI to pull up Govt.

S. Sivadas

S. Sivadas

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, the Congress leader, Mr. P Chidambaram, said on saturday.

He also hit out at the Prime Minister and the Finance Minister, Mrs. Nirmala Sitharaman, urging them to rethink the Rs 20 lakh crore relief package that 'has fiscal stimulus of less than 1 per cent of 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', he 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 per cent 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, the RBI Governor,Mr. Shaktikanta Das, in his first address since Mrs. 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 per cent to 4 per cent.

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.

Mr. P Chidambaram has been among the most vocal critics of the government's Rs 20 lakh crore package, arguing that it 'has left several sections high and dry'.

'...a fiscal stimulus of Rs 1,86,650 crore amounting to barely 0.91 per cent of GDP will be totally inadequate given the gravity of the economic crisis and the dire situation in which people find themselves,' he had said.

Mr Chidambaram had previously questioned facets of the package, including pointing out that two measures related to agriculture and allied activities were part of last year's Expenditure Budget and another on collateral-free loans for MSMEs was in apparent contradiction of a statement by the Union Minister,Mr. Nitin Gadkari.

Mr Chidambaram also took a swipe at the RSS after a pan-India worker's group affiliated to the group, regarded as the ideological mentor of the ruling BJP, criticised the government over policy announcements seen as leading to privatisation and job cuts.

The RSS should be ashamed of how the government has dragged the economy into negative growth territory,' the former Finance Minister tweeted.