Former finance minister and senior Congress leader P. Chidambaram said the Indian economy is still in the woods. Delivering the R. K. Shanmugam Memorial Lecture, organised by The Tamil Chamber of Commerce in Chennai on Saturday, he also took a jibe at the Centre’s claim of V-shaped recovery of the economy.
Mr. Chidambaram pointed out that the economy is seeing a two-speed K-shaped recovery where some have seen their income and wealth grow, while the majority have suffered pain and economic loss.
Only 10% of the population has seen some increase in the income, while 40% has seen a sharp fall in income, while it has been a status quo for the remaining 50%, he added.
Mr. Chidambaram also cited Reserve Bank of India’s commentary that demand has been sluggish, while growth in bank deposits have dropped, household debt has risen, financial savings have declined and high fuel prices have crowded out other discretionary spending.
He also pointed out that inequality has been increasing.
Mr. Chidambaram said that true recovery will happen if the economic growth reaches the 2018-19 levels and crosses the numbers of Financial Year 2020.
“I don’t think it will happen in the current fiscal (2021-22),” he said.
Mr. Chidambaram said, “we are looking at a cloudy future and economists have pointed out that the sluggishness in the world economy would continue till June, 2022.
“So, for the next nine months, the sluggishness in the Indian economy will continue. Post that, if the Indian government takes the right policy measures, the Indian economy can recover. For that, they should know how to retain the economic advisors,” he said.
To a question on higher fuel prices, Mr. Chidambaram blamed the higher taxes of 33% levied by the Central government and said that it is extortion.
