Former finance minister and senior Congress leader P Chidambaram on Wednesday said the economy is likely to take a hit of Rs 2,35,000 crore if growth declines by 1.6 per cent in the wake of demonetisation.
“I expect growth to decline to 6-6.2 per cent this fiscal. We started with 7.6 per cent last year. The CSO then came out with a figure of 6.9 per cent which was based on October 2016 figures. The RBI said 6.9 per cent and the Centre for Monitoring Indian Economy said 6.2 per cent. I expect growth to fall to between 6-6.2 per cent which is 1.60 per cent lower than last year’s estimate,” Chidambaram said at a function to launch his book “Fearless in Opposition” as part of the Express Book Series along with Rupa.
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Chidambaram said this is close to the figure of two per cent fall in GDP growth rate mentioned by former Prime Minister Manmohan Singh. “For every one per cent fall in the growth, the economy loses Rs 1,50,000 crore. With a 1.60 per cent fall, the loss could be around Rs 2,35,000 crore,” he said. “Demonetisation was an unwarranted move. Why punish 120 crore people to increase the tax base. They could have done it by cutting tax rate or through schemes like VDIS and IDS.”
“If I were the finance minister, I would have resisted the move and resigned,” he said. “The objectives of demonetisation were laudable. But in the UP elections, Rs 121 crore of black money was seized. Now you wait for another two or three months when educational institutions open for the next academic year. You will see colleges asking donation of Rs 25 lakh,” he said.
On the Modi government, Chidambaram said there is a concentration of power in the Prime Minister’s Office. When the demonetisation exercise happened, three key people in the finance ministry were not consulted. “We didn’t hear the Finance Secretary and the Financial Services Secretary speaking anything during the 100 days. The Chief Economic Advisor didn’t utter a word till the Economic Survey was released,” he said.
He said the Prime Minister should have consulted former finance minister Yashwant Sinha, who is also from the BJP, and former Prime Minister Manmohan Singh on demonetisation. “I don’t think a person like Manmohan would leak the information,” he said.
Chidambaram said the government should enter into a continuous dialogue with the Opposition parties in order to run the government smoothly. “There should be weekly meetings with Opposition party leaders. This happens in the US and many other countries. There should be a shadow Cabinet in the Opposition. These leaders should be engaged on a continuous basis,” he said.
“We’re not creating enough jobs. Dalits live in fear, students live in fear and the business community has shrunk into fear,” he said, adding that democracy will be under threat in these circumstances. “We can be fearless. We cannot allow this country to shrink into fear,” Chidambaram said.
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