Senior Congress leader and former finance minister P Chidambaram said Union Finance Minister Nirmala Sitharaman should resign because her assessment of the current economic situation was completely "wrong". During an exclusive interview with India Today TV, Chidambaram said latest numbers on inflation and industrial output showed the Modi government had lost control over the economic situation in the country. "Today food inflation touched 10 per cent, factory output shrunk [to] 3.8 per cent, retail inflation has crossed five per cent," said Chidambaram.
This is Chidambaram's second attack on the BJP government since his release. A day after getting bail on December 4, Chidambaram, holding a press conference, had said the Modi government left India economy into ruins. "The government is clueless on the economy, it is stubborn and mulish in defending catastrophic mistakes like demonetisation, flawed GST, tax terrorism," he had said.
Taking strong objection to Chidambaram's statements, Sitharaman had said the Congress party was mistaken and that the NDA government had everything under control. Chidambaram, however, termed her statement "a string of irrelevance".
Talking about the dismal GDP numbers for both April-June and July-September quarters, Chidambaram said the FY20 would most likely end with less than 5 per cent of the economic growth, which as per old methodology, he said, would be "around 3-3.5 per cent growth rate".
On the issue of slowdown being cyclical or structural, Chidambaram said: "Only two people believe that it [slowdown] was cyclical -- one is the finance minister and second, chief economic adviser." He said many economists were also shocked that rather than addressing the demand problem, the Modi government was taking measures to boost supply side. "I think they don't know (about how to address the current economic situation)," he added.
Advising that the Modi government should first admit that it had done serious mistakes in the past five years - in terms of demonetisation and Goods and Services Tax -- before fixing current economic issues, Chidambaram said then the government should put more money in the hands of people as it would address the "demand side".
"Demonetisation was a serious mistake. The design of the GST was a mistake and the implementation was completely wrong. They gave extraordinary powers to tax and investigating agencies and they have put fear in the minds of the investors by indulging in the retrospective taxation of humongous sums of money," he said.
On asking what he would have done if he were the current finance minister, Chidambaram said he would resign if "my assessment was so wrong". He, however, added that it was for PM Modi to ask for Sitharaman's resignation.
Talking about measures to bring the economy out of the slowdown, Chidambaram said rather than cutting progressive taxes, the government should reduce regressive taxes and take measures to put more money in the hands of people. "Put money in people's pockets, cut regressive taxes and don't cut progressive taxes," he said.
Edited by Manoj Sharma