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Regular-article-logo Sunday, 23 June 2024

Don’t ignore the poor, give cash: Cong

Party underlined that the FM's package added up to Rs 3.5 lakh cr and wondered where the rest of the Rs 16.5 lakh cr promised by Modi had gone

Our Special Correspondent New Delhi Published 13.05.20, 11:03 PM
Chidambaram addresses the new conference on Wednesday.

Chidambaram addresses the new conference on Wednesday. (PTI)

The Congress on Wednesday expressed disappointment at the financial package announced by finance minister Nirmala Sitharaman, arguing it ignored the worst-ever humanitarian crisis of independent India and would prove deficient in dealing with the critical concerns of the economy.

While it welcomed the “modest” support extended to the micro, small and medium enterprises (MSMEs), the party argued that the topmost priority was to save the millions of distressed poor. It’s a concern also aired by economists of global repute such as Raghuram Rajan, Abhijit VinayakBanerjee and Thomas Piketty over the past month.

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The Congress underlined that Sitharaman’s package added up to Rs 3.5 lakh crore and wondered where the rest of the Rs 16.5 lakh crore promised by Prime Minister Narendra Modi had gone.

Modi had on Tuesday announced a stimulus package of Rs 20 lakh crore. The Congress accused him of announcing the huge package to grab headlines.

“The government refuses to acknowledge there is a huge humanitarian crisis — the biggest since Partition in 1947. Millions are walking hundreds of miles — pregnant women, children,” former finance minister P. Chidambaram told reporters.

“They are saying, ‘We would rather go home and die’. They were pushed to destitution and are now being pushed to devastation. The government has refused to extend help to the poorest.”

Chidambaram argued that it would require less than Rs 1 lakh crore to transfer Rs 7,500 to the accounts of each poor household.

“This is a cruel blow dealt to those who toil every day. There is also nothing by way of cash transfer to the bottom half of the population (13 crore families) who have been pushed into destitution,” he said.

“Only yesterday, professor Thomas Pikketty pleaded for cash transfers to the poor. This government is a prisoner of its own ignorance and fears. The government must spend more, but it is not willing to do so. The government must borrow more, but it is not willing to do so.”

Chidambaram flagged the states’ so far fruitless appeals to the Prime Minister for cash.

“The chief ministers have repeatedly pleaded with Modi but he doesn’t respond. Even the states’ dues and GST shares are not being released,” he said.

“The states, which are the frontline warriors (against the infection), are bankrupt. The government must allow the states to borrow more and spend more, but it is not willing to do so. This is not the time to think of the fiscal deficit.”

While welcoming the package for MSMEs, Chidambaram highlighted its shortcomings.

“The finance minister announced some support measures for MSMEs, although the measures were skewed in favour of the larger (about 45 lakh) MSMEs. The bulk of the 6.3 crore MSMEs were left high and dry,” he said.

“We welcome the offer of subordinate debt (Rs 20,000 crore) and equity corpus fund (Rs 10,000 crore), but we will await the ‘terms and conditions’. The devil is in the detail.

“On the credit guarantee fund, it is not the entire fund that will be actually spent. The expenditure will be limited to the extent of NPAs (non-performing assets) in the outstanding guaranteed credit to MSMEs.

“Assuming an NPA level of 20-50 per cent, the actual expenditure over the period of the loans (which may be years) will be a maximum of Rs 300,000 crore. We will also count the Rs 30,000-crore credit guarantee to NBFCS.”

He added: “I refrain from commenting on liquidity-related measures. Such measures do not amount to fiscal measures of support and nowhere in the world are they included or counted in a fiscal stimulus package. Except for the modest MSME package, we are disappointed with today’s announcements.”

Asked whether the measures would generate demand, Chidambaram said: “How can liquidity measures create demand? Liquidity measures operate on supply side. Stimulus package creates demand. That’s why we are asking money to be given in people’s hands.”

Asked about Modi’s stress on self-reliance and his exhortations to all Indians “to become vocal for their local”, he said: “I compliment the Prime Minister on playing with words. People anyway patronise good quality local products. Nobody opposes self-reliance but we have to see our farmers and workers become self-reliant and self-satisfied.”

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