New Delhi, (Samajweekly) P. Chidambaram is former Finance and Home Minister of the country and a senior leader of the Congress. His views on economic matters have always held value. He spoke on a wide range of issues from farmers MSP to the Covid-hit economy making a V-shaped recovery.
Lambasting the government’s economic mismanagement, he argued that not only was it status quoist but was regressive.
Excerpts from an exclusive interview with IANS:
Q: Where do you think the govt is using the petro product excise funds? Even as it keeps retail fuel prices elevated and consumers burdened? Is it diverting them to social welfare schemes?
A: It is difficult to answer the question without looking at the Budget Estimates (BE) and the actual expenditure till date under each welfare scheme and other schemes. In broad terms, it would be correct to say that government’s budgeted revenues are not being realized; that expenditure under certain heads like defence and health will be over the initial estimates; and that expenditure has been curtailed under some heads. Yet there is a larger gap than budgeted between total revenues and total expenditure. Hence, the additional revenue earned through mid-year taxation is perhaps going into filling the gap and containing the revenue and fiscal deficits.
Q: The Modi govt over the last six years seems to have followed the UPA welfare economics model and seems to have succeeded with deeper administrative reform by winning several elections predicated on this path?
A: In the last six years, the BJP has won elections and has lost elections. You seem to have forgotten that in the last six years the BJP lost elections in Karnataka, Goa, Manipur, Punjab, Rajasthan, Chhattisgarh, Madhya Pradesh, Jharkhand and Maharashtra. Besides, the BJP performed poorly in West Bengal, Tamil Nadu, Andhra Pradesh and Telangana. It is correct that the BJP has relied entirely on the welfare schemes conceived and first implemented under the UPA governments. I don’t have any evidence of “deeper administrative reforms”.
Q: How severe do you think the impact of Covid is on the economy and do you see the consumption economy making a V-shaped return?
A: The impact will be very severe. India will be among the most affected economies, according to the IMF and Oxford Economics. A recovery will be delayed and gradual. I do not expect a V-shaped recovery.
Q: The government finances seem to be in disarray, states are making a ruckus over GST compensation, what does the future hold?
A: Both the Centre’s and the States’ finances are in disarray. The central government has not kept its promises to devolve the states’ share of tax revenues or grants or GST compensation. The future is bleak for a federal system.
Q: The contentious farm bills have drawn the ire of the farm community but do you think the Congress has made it a political rallying point? Where has the govt let down the farmers, seems to be good reform?
A: The severe drawbacks of the farm bills have been highlighted and exposed, I do not wish to repeat them here. The crucial question is MSP: how many farmers get MSP today and how many will get it in the future? Farmers who have traditionally benefited from MSP, and fear losing it, are the farmers in the forefront of the protest. For the Congress that built the three pillars of the current food security system – MSP, Public Procurement and PDS – it is an article of the party’s faith that we must fight for MSP and PDS.
Q: Is this govt a status quoist when it comes to economic reform or do you think they have been bold?
A: The BJP government is not only status quoist, it is regressive. It is adopting policies that will take us back to the era of protection, autarky, licenses and controls.
Q: Should the RBI give corporates bank licenses? Are you happy with the conduct of the central bank at this crucial time in our imperials economic and financial System?
A: No, allowing corporates and business houses into the banking sector to set up full-fledged banks is a bad idea. I have already given our reasons. We support the analysis made by Dr Raghuram Rajan and Dr Viral Acharya. The RBI has yielded much of its autonomy to the government, which is a matter of grave concern.
