RBI should bluntly tell govt to do their duty, take fiscal measures: Chidambaram

The Reserve Bank of India (RBI) should “bluntly tell the government to do their duty and take fiscal measures” to revive the economy that has come to a standstill after the nationwide lockdown imposed, senior Congress leader and former finance minister P Chidambaram said on Saturday (May 23).

Chidambaram’s statement comes after RBI Governor Shaktikanta Das announced a 40 basis point reduction in the repo rate, from 4.4 percent to 4 percent, which is expected to help infuse more liquidity into the market.

The former finance minister pointed out Das’s statement that demand had collapsed, and that growth in 2020-21 was headed towards “negative territory”, and questioned why they were infusing more liquidity if that was the case.

“He should bluntly tell the government, ‘Do your duty, take fiscal measures’,” Chidambaram added.

Governor @DasShaktikanta says demand has collapsed, growth in 2020-21 headed toward negative territory. Why is he then infusing more liquidity?

He should bluntly tell the government ‘Do your duty, take fiscal measures’.

— P. Chidambaram (@PChidambaram_IN) May 23, 2020

He also hit out at Prime minister Narendra Modi and Finance Minister Nirmala Sitharaman, asking whether they were “lauding themselves” for a package that has fiscal stimulus of “less than 1% of India’s GDP”.

“Even after RBI’s statement, is the @PMOIndia or @nsitharaman lauding themselves for a package that has fiscal stimulus of less than 1% of GDP?” he questioned on Twitter.

Even after RBI’s statement, is the @PMOIndia or @nsitharaman lauding themselves for a package that has fiscal stimulus of less than 1% of GDP?

RSS should be ashamed of how the government has dragged the economy into negative growth territory.

— P. Chidambaram (@PChidambaram_IN) May 23, 2020

Chidambaram had earlier said in a statement this week, “… a fiscal stimulus of Rs 1,86,650 crore amounting to barely 0.91 percent of GDP will be totally inadequate given the gravity of the economic crisis and the dire situation in which people find themselves.”

He also took a dig at the Rashtriya Swayamsevak Sangh (RSS), which is believed to the ideological mentor of the Bharatiya Janata Party (BJP).

“RSS should be ashamed of how the government has dragged the economy into negative growth territory,” he said.

Chidambaram had also questioned the government’s economic stimulus package earlier, saying it had left several sections of the economy “high and dry”.

Related news | Chidambaram seeks clarification on measures announced by FM Sitharaman

He had pointed out that two of the measures announced by the finance ministry as part of the stimulus package had already been included as part of this fiscal’s Expenditure Budget.

He further went on to highlight the statement by Union minister for MSMEs Nitin Gadkari on collateral-free automatic loans for MSMEs, which contradicted Nirmala Sitharaman’s.

While addressing a media briefing on the stimulus package on May 15, Sitharaman had announced ₹3 lakh crore for collateral-free automatic loans that would reportedly benefit 45 lakh MSMEs.

However, Gadkari had said in an interview to CNBC-TV18 that government agencies owed ₹5 lakh crore in unpaid dues to MSMEs.