Senior Congress leader P. Chidambaram, Image credit: PTI
New Delhi : With the RBI predicting the quarterly economic growth rate is expected to decline by 8.6 per cent, senior Congress leader P. Chidambaram on Thursday said that remaining quarters of the fiscal may record "negative growth" and that for the first time since data was recorded methodically, the Indian economy has gone into a recession, as defined by economists.
Addressing a press conference, the former Finance Minister said: "There is nothing to be pleased about these rates. These rates mean that we are still unable to catch up with even the tepid growth rates recorded in 2019-20. I am afraid the remaining quarters of 2020-21 will also record negative growth rates."
Chidambaram said that since these rates are calculated y-o-y, it must be remembered that in Q1 of 2019-20, the growth rate was 5.2 per cent and in Q1 of 2020-21, it was (-)23.9 per cent. Similarly, in Q2 of 2019-2O, the growth rate was 4.4 per cent and in Q2 of 2020-21, it is expected to be (-) 8.6 per cent.
"It is therefore surprising that the Finance Minister should quote the RBI as predicting that the economy will register a positive growth rate in the third quarter. Nearly one and a half months of the third quarter are already over and there are no signs that the growth rate will turn positive in the third quarter," he said.
The Congress leader said that his party has repeatedly emphasised the steps that need to be taken to revive the economy, and that as farmers must get fair and remunerative prices for their produce as only a small fraction get MSP and the very poor are outside the formal economy.
"There are millions who have lost their jobs and livelihoods. Unless money is put in their hands, they will not be able to contribute to the revival of demand and the consequent revival of the economy. It is absolutely necessary that a scheme like NYAY must be implemented," Chidambaram said
The Congress leader alleged that as far as the formal economy is concerned, the government has done nothing to bring back the jobs that were lost or to create new jobs.
Noting that the unemployment rate on November 11 stood at 6.4 per cent, he said that it is feared that state governments will cut their capital expenditure by nearly Rs 2.7 lakh crore. "That is about one-half of the budgeted capital expenditure by the states. The Centre is starving the state governments of funds and doling out measly sums of money."
Congress leader Rahul Gandhi too, citing RBI data, attacked the government.
"India has entered into recession for the first time in history. Mr Modi's actions have turned India's strength into its weakness," he said in a tweet.