Our Bureau
New Delhi
The Congress on Monday rejected the government’s claim of giving Rs20 lakh-crore as a stimulus package as bogus, asserting its package really boils down to just Rs1,86,650 crore which is just 0.91% of the GDP and not 10% as claimed by the PM last Tuesday.
Shredding the five tranches of announcements by Finance Minister Nirmala Sitharaman on behalf of the Congress, former finance minister and senior party leader P Chidambaram said: “We express our thorough disappointment.” He requested the government “to reconsider the Stimulus Package and announce a Revised and Comprehensive Fiscal Stimulus Package of not less than Rs10 lakh crore of real Additional Expenditure equivalents to 10 per cent of GDP.”
He said a fiscal stimulus of Rs1,86,650 crore is totally inadequate given the gravity of the economic crisis and the dire situation in which people find themselves. Most analysts, rating agencies and banks have placed the size of the fiscal stimulus at between 0.8 to 1.5 per cent of GDP, he underlined. He gave a breakup of what items actually account for the stimulus and asserted that what the government declared does not help 89% of people having zero weekly income.
The ex-FM said PM Modi will have to reflect he had dubbed the MGNREGA launched by the previous UPA government as a “monumental failure” is now proving to be the “safety net” for the rural masses and the jobless migrant labourers returning home.
Asserting that the fiscal stimulus package has left several sections high and dry, Chidambaram listed 11 of them: the bottom half of the population (13 crore families); migrant workers; farmers; landless agricultural labour; daily wage non-agricultural labour; workers, who have been laid off or retrenched; workers in unorganised or unregistered businesses / units who have lost their jobs; self-employed who have no work; 7 crore shopkeepers; (10) lower middle class families who have run out of cash and are forced to borrow; and the last, 5.8 crore MSMEs.
He stated categorically there can be no fiscal stimulus to the economy without Additional Expenditure over and above the Budgeted Expenditure which is of Rs 30,42,230 crore for 2020-21 and picking up items from the budget is no stimulus at all.
Chidambaram said FM acknowledged that Additional Expenditure must be financed by Additional Borrowing. The true value of the fiscal stimulus package will, therefore, be known when we know what is the Additional Borrowing in 2020-21 to finance the Additional Expenditure over and above the Expenditure Budget of Rs 30,42,230 crore. The truth cannot be hidden for long.
He pointed out that even the leaders of the Indian industry like Azim Premji and Venu Srinivasan backed the Congress suggestion for giving cash to the poor to rebuild their life as they supported cash transfer of Rs 5000/7000 a month to each poor household and migrant worker for at least 3 months.
In reply to a question, he said nothing to worry today about the fiscal deficit which may go up from 3.5% to 5.5% but half of it can be monetised and so immediate concern is to borrow more and spend more. He said the government's overemphasis on liquidity is wrong as it works on supply side and not on the demand side that needs to be addressed to revive the economy. He regretted that not a single rupee is going out as cash transfer.
On increasing the borrowing limit of the states from 3% of gross GST to 5%, Chidambaram said strings are attached to fulfil certain goals that will take time and by that time the year will be out. He wondered what purpose it will serve if the money does not come to the states immediately.
A little stimulus worked out by Chidambaram from the plethora of announcements by the Finance Minister comprises
1. Revenue lost due to tax concessions since 22-03-2020: Rs 7,500 crore
2. Pradhan Mantri Garib Kalyan Package
Cash transfers Rs33,000
Free grain Rs60,000
3. Medical and Health Infrastructure Rs15,000
4. EPF support for Businesses and Workers Rs2,800
5. Reduction of EPF rates Rs6,750
6. Free food grain for migrant workers for 2 months Rs3,500
7. Interest subsidy for MUDRA Shishu loans (assuming the
entire subsidy will be paid to the banks in 2020-21) Rs1,500
8. Additional credit through KCC (assuming the additional
interest subsidy will be paid to the lenders in 2020-21) Rs8,000
9. TOP to TOTAL Operation Greens 500
10. Promotion of Herbal Cultivation for 2 years Rs4,000
11. Viability Gap Funding (assuming the entire amount
will be paid in 2020-21) Rs8,100
12. Additional allocation for MGNREGS Rs40,000
TOTAL Rs1,86,650
He said the rest of the announcements included already budgeted expenditure, front loading of some budgeted expenditure, regulatory measures, a number of liquidity measures, medium to long term plans/schemes, and proposed reforms that cannot put back the economy on rails in near future which is need of the hour.
