Centre’s supply-side measures to revive economy have failed: Finance Minister Amit Mitra

In the letter, sent on Thursday, Amit Mitra advised the Union government to switch to demand stimulation and provide money to people to revive the economy.

West Bengal Finance Minister Amit Mitra has written a letter to Union Finance Minister Nirmala Sitharaman, saying the Centre’s supply-side measures to revive the Covid-hit Indian economy had failed. In the letter, sent on Thursday, Mitra advised the Union government to switch to demand stimulation and provide money to people to revive the economy.

Questioning the Narendra Modi government’s “utterly wrong macroeconomic policies”, the state minister said, “In August, the unemployment rate had shot up again to 8.32 per cent which implies that 36 million people have lost jobs. In other words, 36 million people in India have no jobs and have no earnings. This is one-and-a-half times the entire population of Australia. In fact, Azim Premji University study reveals ‘nearly half of the formal salaried workers have moved into informal work between late 2019 and late 2020 — shocking indeed.”

Citing GDP data, Mitra said, “It is pathetic that private consumption in FY22 so far, is almost identical to private consumption in FY18 — four years ago (according to CMIE). In fact, the RBI’s Current Situation Index dropped to a record 48.5 per cent in May 2021 from 53.1 per cent in March 2021. This demonstrates the deep pessimism among the customers of our nation.”

The state minister criticised the “cruel rise in petrol and diesel prices and now two consecutive increases in quick succession of cooking gas cylinders”, and urged Sitharaman to “imagine the plight of the common people in general and our homemakers in particular”. He continued, “I have humbly tried to bring to your kind attention the pathetic plight of the common people hit by at least five factors as elucidated above with data. I have also tried to bring to your attention the unprecedented reverse migration of workers from manufacturing to the agricultural sector which has been forced upon them, leaving no option.”

The state finance minister said the “rising trend of inflation” was eroding the purchasing power and income of people. “It is also evident that private consumption is collapsing, demonstrating the underlying despair of the common households. At the same time, corporate of all sizes are holding back from investing in the economy as they do not see demand picking up in the near future,” he added.

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