Tyres of Indian economy punctured: Chidambaram

Former finance minister P Chidambaram today said the state of the economy was bad due to wrong policies of the NDA government and that the tyres of three of the four wheels on which the economy rides were punctured.

Addressing a press conference here, he said a "flawed road" to Goods and Services Tax (GST) continued to haunt trade and business, and that the adverse effect of demonetisation had been established "beyond doubt".

He also advocated bringing petrol and diesel under GST and asked why the central government was passing the buck to states. If the BJP was committed to bringing petrol and diesel under GST, it should go ahead and do it, he said.

"Why are you blaming a few finance ministers from non-BJP (state) governments? If you bring petroleum products under GST, the prices will decline immediately. I am not saying cut it by Rs 25...Cut it by Rs 5, Rs 6 or Rs 7. Why you are cutting it by one paisa?" Chidambaram alleged that there was distress in various sections of the society, including farmers who were not getting remunerative prices of their produce and the youth due to joblessness.

"The tyres of three of the four wheels on which the economy rides are punctured. Firstly exports: the growth rate in the last four years have been negative. Secondly, private investment: it is in the doldrums, if not dead. Gross fixed capital formation is stuck at 28.5 per cent for three years. Thirdly, private consumption: it was limping until a few months ago, there is a mild up-pick, and we keep our fingers crossed.

"The only tyre that seems to be inflated is government expenditure, but here too the government's options are getting limited because of the pressure on the current account deficit and the fiscal deficit," he said.

"I don't think the situation in the world economy is affecting India, what is affecting India is our own policies, our reckless decisions and our administrative incompetence," he said.

The Congress leader claimed that joblessness was rampant and there was a great ferment on campuses across the country because young men and women knew that there would be no job when they graduate.

"So far nobody has bought the innovative idea that 'frying pakodas is also a job'," he quipped.

Farmers' despondency, he said, has turned into anger and farmers have come on to streets to protest.

The principal reasons are uneconomic prices for farm produce and stagnant wages of farm labour, Chidambaram said, adding that minimum support price (MSP) was not adequate and the annual increases have been niggardly.

"Every farmer knows that the promise of MSP = Cost + 50 per cent is a jumla'," he said.

"A flawed GST continues to haunt trade and business," he said, alleging that refunds of thousands of crores of rupees have been held up putting businesses, especially exporters, in jeopardy.

The former finance minister said he had no expectations from the CBDT. "The best thing they can do is to give a quiet burial to the CBDT." Chidambaram said interest rates would rise throwing more burden on consumers and producers. He alleged social security laws and programmes had been neglected and the Food Security Act had not been implemented.

"MGNREGA is no longer demand-driven, wage arrears have mounted. Crop insurance covers barely 30 per cent of farmers; it is a windfall for insurers. Health protection scheme is another jumla'," he said.

On the Punjab National Bank scam, Chidambaram said, "I know they have made no effort to get them (accused Nirav Modi and Mehul Choksi) back and in fact I doubt if they are making any effort...they allowed both the gentlemen that we are talking about to leave the country. Having allowed them to leave the country, we doubt very much that they are making any effort to get them back."

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)