2020-21 darkest year of economy in four decades, most Indians poorer: Chidambaram

New Delhi, [India], June 2 : Congress leader P Chidambaram on Tuesday said that most Indians are poorer than they were two years ago with most economic indicators being worse for the period and said the government must admit its "errors of commission and omission, reverse its policies and heed the advice of economists and the opposition".
He said that 2020-21 has been "the darkest year of the economy in four decades".
The former Finance Minister said there are no surprises in the 10-page press note issued by the National Statistical Office on the provisional estimates of Annual National Income for 2020-21.
"As expected, the GDP at constant prices recorded a negative growth of (-) 7.3 per cent, the first time India has recorded negative annual growth since 1979-80," he said.
Chidambaram said three numbers of GDP at constant prices will highlight the parlous state of the economy - 2018-19: Rs 140,03,316 crore; 2019-20: Rs 145,69,268 crore and 2020-21: Rs 135,12,740 crore
"The increase in 2019-20 was modest at 4.0 per cent, but the decline in 2020-21 was severe at -7.3 per cent. The net result is that the GDP in 2020-21 is lower than the GDP of two years ago (2018-19)," he said.
"The fiscal 2020-21 has been the darkest year of the economy in four decades. The performance in the four quarters of 2020-21 tells the story. The first two quarters witnessed a recession (-24.4 and -7.4 per cent). The performance in the third and fourth quarters did not herald a recovery. The estimated rates of 0.5 per cent and 1.6 per cent were due to a very low base of 3.3 and 3.0 per cent in the corresponding quarters of the previous year. Besides, these rates come with a number of caveats."
He said predictions of V-shaped economic recovery was a false story.
"When the first wave of the pandemic appeared to subside last year, the Finance Minister and her Chief Economic Adviser began to sell the story of a recovery. They saw 'green shoots' when no one else did. They predicted a V-shaped recovery. It was a false story and we had expressed our strong reservations and warned there were no signs of a recovery. We had pointed out that what the economy needed was a strong dose of stimulus, including increased government expenditure, direct transfers of cash to the poor and liberal distribution of free rations. Our pleas fell on deaf ears, and the result is a negative growth of (-) 7.3 per cent," he said.
"What is most worrying is that the per capita GDP has fallen below Rs 1 lakh, to Rs 99,694. In percentage terms it is a decline of (-) 8.2 per cent over the previous year. It is lower than the level achieved in 2018-19 (and maybe even 2017-18). The deeply worrying conclusion is that most Indians are poorer than they were two years ago," he said.
The Congress leader said that the Press Note of the NSO reveals that in respect of most economic indicators they are worse than what they were two years ago and cited examples of private consumption, gross fixed capital formation (GFCF), exports and imports.
"The current state of the economy is no doubt largely due to the impact of the pandemic, but it has been compounded by the ineptitude and incompetent economic management of the BJP-led NDA government. Good advice by distinguished economists and renowned institutions has been rebuffed. World-wide experience has been ignored. Suggestions on fiscal expansion and cash transfers have been turned down. Hollow packages like Atmanirbhar have fallen flat," he said.
He said the two leading chambers of business and industry -- CII and FICCI --have, in the last few days, echoed the party's views and pleaded for fiscal expansion, including cash transfers to the poor.
He accused Finance Minister Nirmala Sitharaman of following "misguided and disastrous policies".
"The RBI's monthly review has flagged the 'demand shock' and its consequences. The CMIE report on loss of jobs and growing unemployment is alarming. The research and survey reports of Aziz Premji University have concluded that 23 crore people have been pushed below the poverty line and into indebtedness. We may note that Nobel Laureate, Dr Abhijit Banerjee, has called for printing money and increasing spending," he said.
Chidambaram said the country is facing second wave of the pandemic.
"So far, it seems to be following the same pattern as the first wave, except that it has wrought more damage in terms of numbers of infections and deaths. If 2021-22 should not go the same way as 2020-21 did, the government must wake up, admit its errors of commission and omission, reverse its policies and heed the advice of economists and the opposition," he added.