Don't take inflation lightly, Chidambaram cautions government

Former finance minister P Chidambaram on Wednesday cautioned the government against taking inflation lightly, saying every family is hit hard by price rise and asked why the RBI has not reduced bank rates for 13 months if it was low as claimed.

Initiating discussion on the Union Budget 2024-25 in the Rajya Sabha, the senior Congress leader also asked if the proposed employment-linked incentive (ELI) has been mooted as the existing production-linked incentive (PLI) schemes have failed to generate employment while mocking Finance Minister Nirmala Sitharaman for lifting ideas from the Congress manifesto for the ELI scheme.

He said the finance minister in her Budget speech “dismissed the subject in just 10 words”.

“Is inflation such a trivial subject (that) you can deal with it casually and dismiss it in 10 words?” he asked, arguing that in the interiors and hinterland of India, “inflation is much higher” than data collected mostly from towns and villages that are along national and state highways and district roads.

Chidambaram also took exception to the statement by the Chief Economic Advisor in the Economic Survey that India’s inflation continues to be low, stable and moving towards the 4 per cent target.

“It has been moving for the past four years. When will it arrive at the 4 per cent target?” the Congress leader asked.

He further said, “I think what the Chief Economic Advisor said in the Economic Survey is the injury, and the honourable finance minister dismissing the subject in ten words is adding insult to injury.”

He argued that if inflation is low, stable and moving towards the 4 per cent target, why has the RBI not revised downward the bank rate fixed in June 2023? “Bank rate is a good measure of where inflation is moving. If inflation is moving towards the 4 per cent target, why is the RBI keeping the bank rate at 6.5 per cent for the last 13 months? Why is the MPC, the Monetary Policy Committee, not willing to revise it downwards?” Chidambaram said.

He asserted that inflation is a humiliating situation because every family is hit by inflation. “I warn this government, you are taking inflation not so seriously.”

The results of the last set of by-elections in which the INDIA bloc won 10 out of 13 seats was a “punishment (and) warning administered” by the people to the NDA for high inflation, he said.

“If you don't take inflation seriously, you will be punished more. If you want to suffer, you are welcome to suffer the punishment,” Chidambaram added.

While acknowledging ELI is an interesting idea, he expressed doubt that it will be able to place 290 lakh people under it. “It should not turn out to be another election ‘jumla’ like your 2 crore jobs a year,” Chidambaram said.

On the tax relief proposed for individuals in the Budget, he said the benefit will be only for only 2-3 crore people and asked what relief has been given to those in irregular jobs and daily labourers.

Highlighting the income disparity across the population, he also said India continues to languish in the global hunger index. “The action that the government has taken, namely giving free food grain to 81 crore people, is a tacit admission that on the hunger index we are very, very low...your own action shows that people cannot afford food,” Chidambaram said.

The senior Congress leader also attacked the government for destroying federalism by picking and choosing among states for grant of relief.

“I don't grudge at all that you are giving relief to Andhra Pradesh, or Bihar, but what about the other states? We are a federal country. This is the death knell of federalism if you pick and choose among states. You are the Union of India, you are the Union government, you are the government of all the states. You cannot pick and choose one state and deny relief to another state,” Chidambaram asserted.