Govt is a prisoner of its own ignorance, fears: Chidambaram
May 13, 2020
New Delhi [India], May 13 : Former Finance Minister and senior Congress leader P Chidambaram on Wednesday said that except for the "modest MSME package," he is disappointed with announcements made by Finance Minister Nirmala Sitharaman and alleged that the government is a prisoner of its own ignorance and fears.
"Except for the modest MSME package, we are disappointed with today's announcement," Chidambaram said.
He said "there is nothing" in what the Finance Minister said today for the lakhs of poor, hungry and devastated migrant workers who have walked - and many thousands are still walking - back to their home states.
"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. Only yesterday, Professor Thomas Pikety pleaded for cash transfers to the poor," he said.
Referring to measures for MSMEs, Chidambaram said the measures were "skewed in favour of the larger MSMEs (about 45 lakh MSMEs)."
"I think the bulk of the 6.3 crore MSMEs were left high and dry. 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 in the outstanding guaranteed credit to MSMEs," Chidambaram said.
"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 3,00,000 crore. We will also count the Rs 30,000 crore credit guarantee to NBFCs. We will, therefore, include Rs 3,60,000 crore in the Rs 20 lakh crore package," he added.
Chidambaram refrained 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," he said.
"Where is the rest of the Rs 16.4 lakh crore? 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. The government must allow states to borrow more and spend more, but it is not willing to do so," he added.
Prime Minister Narendra Modi had on Tuesday announced a Rs 20 lakh crore comprehensive special economic package to help various sections and MSMEs.
