Economy stuck in groove: Chidambaram

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SME Times News Bureau | 02 Jan, 2016
The Indian economy is stuck in a groove and the growth of the Gross Domestic Product in 2015-16 is not likely to be higher than 7.3 percent, former finance minister P. Chidambaram said on Friday.

There was acute distress in rural India since promised jobs were not created and people were not impressed by Modi's numerous visits to foreign countries, he said at a press conference here.

The Congress leader said the BJP-led government had confidently predicted the growth of Indian economy at 8.1 to 8.5 per cent in 2015-16 at the beginning of 2015 and that many of its promises, including on more jobs, were premised on a high growth of GDP.

"I am afraid none of the promises has materialised. For the whole of 2015-16, GDP growth is not likely to be higher than 7 to 7.3 percent, which means it will be the same as - or lower than - in 2014-15. The economy is stuck in a groove," Chidambaram said.

He said the mid-year economic analysis has pointed out that private investment and exports - two of the four drivers of demand - were languishing.

"The Indian economy is like a car running on two wheels. Corporate balance sheets are stressed, net sales have fallen by 5.3 percent, and profit after tax is flat. Non-food credit growth at 8.3 percent is the slowest in 20 years. Growth of credit to industry is 4.6 percent while credit to medium enterprises has actually shrunk by 9.1 percent," the Congress leader said.

The former minister said exports have recorded decline for 12 successive months compared with previous year. "This is unprecedented," he said.

He said the government did not seem confident of meeting the fiscal deficit target of 3.9 per cent and cautioned it against deviating from the path of fiscal consolidation in 2016-17.

"Crop insurance is unavailable to most farmers. Banks are reluctant to give loans against jewellery. Education loans have practically stopped," he said.

The Congress leader accused the government of failing to check price rise and alleged growing intolerance, saying these had led to "much grief and fear among the people".

The former minister said the 26th quarterly employment survey showed that job creation in manufacturing and export-oriented sectors fell by 43,000 whereas these sectors added 182,000 jobs in the same period in 2014.

"There is no evidence that the promised jobs are being created," the former finance minister said.

Chidambaram referred to low prices of international crude oil and said there was no international pressure on the government.

"I am not yet prepared to say that there has been fiscal mismanagement but there are pointers to serious mistakes in fiscal management."

Chidambaram accused the Narandra Modi government of not engaging the opposition on any important issue and said people were wondering if the central government had a clear and consistent policy on Pakistan.

He also rejected the charge of "obstructionism" made against the Congress by Prime Minister Narendra Modi on Thursday.

Chidambaram said Congress opposition to the government's alleged wrong policies or poorly-drafted laws or acts of misconduct or misuse of government agencies cannot be termed as obstructionism.

The Congress leader said that the overbearing attitude of the government was mainly responsible for the frequent disruptions in parliament and the absence of cooperation outside parliament.

He said the Congress had cooperated with the government in passing 67 and 45 bills in the Lok Sabha and the Rajya Sabha respectively during the last 19 months.

Referring to Nepal, he said India seemed to have lost the goodwill of the people as well as the government of Nepal as also Madhesi parties.

"Rhetoric, U-turns and impulsive steps do not make for a coherent foreign policy," he remarked.

Referring to Modi's visits abroad, the Congress leader said: "When anything is overdone, there are not only diminishing returns, but it also invites ridicule, as you will find from a cursory survey of the social media."