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Bluntly ask Centre to 'do your duty, take fiscal measures', Chidambaram tells RBI Governor

P Chidambaram questioned RBI's decision to infuse more liquidity even though economic growth in the financial year 2020-21 is headed towards negative territory

twitter-logoBusinessToday.In | May 23, 2020 | Updated 17:01 IST
Bluntly ask Centre to 'do your duty, take fiscal measures', Chidambaram tells RBI Governor
Former finance minister P Chidambaram

Former finance minister P Chidambaram has lambasted liquidity-infusing measures announced by the Reserve Bank of India (RBI) in its latest monetary policy statement. The senior Congress leader questioned RBI's decision to infuse more liquidity even though economic growth in the financial year 2020-21 is headed towards negative territory.

In a series of tweets, Chidambaram said: "Governor @DasShaktikanta says demand has collapsed, growth in 2020-21 headed toward negative territory. Why is he then infusing more liquidity?"

ALSO READ: India's GDP growth in FY21 to remain negative, says RBI's Shaktikanta Das

In his tweet, the former finance minister asked RBI Governor Shaktikanta Das to firmly ask the government to do its part in driving economic growth. "He should bluntly tell the government 'Do your duty, take fiscal measures'," Chidambaram said.

After the Monetary Policy Committee (MPC) meeting on Friday, Das announced a 40 bps cut in repo rate to 4 per cent from 4.40 per cent. The reverse repo rate has been adjusted to 3.35 per cent. Accordingly,  the marginal standing facility (MSF) rate and the bank rate have been reduced to 4.25 per cent from 4.65 per cent. The MPC has also decided to continue with the accommodative stance as long as it is necessary to revive growth and mitigate the impact of  COVID-19  on the economy while ensuring that inflation remains within the target.

ALSO READ: RBI Governor Shaktikanta Das announces repo rate cut of 40 bps to boost economy

Das had also said that India's GDP growth in FY21 is expected to remain in the negative territory with some recovery in the second half of the financial year. "The end-May 2020 release of NSO on national income would provide greater clarity, enabling more specific projections of GDP growth in terms of both magnitude and direction. Much will depend on how quickly the COVID curve flattens and begins to moderate," he said.

In his tweet, Chidambaram further said, "Even after RBI's statement, is the @PMOIndia or @nsitharaman lauding themselves for a package that has the fiscal stimulus of less than 1% of GDP? RSS should be ashamed of how the government has dragged the economy into negative growth territory."

ALSO READ: Coronavirus impact: Inflation outlook uncertain at this point, says RBI's Shaktikanta Das

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