If diagnosis is wrong, prescription will be useless: Chidambaram on economy

Former finance minister P Chidambaram on Thursday launched a scathing attack at the BJP-led national coalition’s handling of the economy, underscoring that the government had been unable to correctly diagnose the problems.

“If the diagnosis is wrong, the prescription will be useless, may be even fatal. Even after 7 months into the fiscal year, the BJP government believes that the problems faced by the economy are cyclical. The government is wrong. It is wrong because it is clueless,” Chidambaram told the media conference, his first after being released from Tihar jail last evening.

Chidambaram continued with his diagnosis in a 900-word statement.

“There is less demand among the people because they have less money and less appetite to consume due to uncertainty and fear. Unless demand increases, there will not be increased production and output or increased investment,” the former Union finance minister said.

The 74-year-old Congress leader, who described the economy as the most pressing and explosive issue of the day, was released on bail yesterday after 106 days in custody at Tihar jail in national capital Delhi.

Chidambaram was arrested on August 21 by the CBI for alleged irregularities in grant of approval to INX Media group receiving foreign funds in 2007. He got bail in October but by then, had already been arrested by a senior federal agency Enforcement Directorate on charges of money laundering.

The senior Congress leader walked out of jail late on Wednesday evening after the Supreme Court granted him bail.

His opening statement at the Congress headquarters on Thursday started with the situation in Kashmir where political leaders are still under detention. “Freedom is indivisible: if we must preserve our freedom, we must fight for their freedom,” he said.

Chidambaram, who was released by the Supreme Court on the condition that he doesn’t speak on the case against him, steered clear. But before he launched into a stinging critique of the economy, the former minister stressed that his record as a minister and “my conscience are absolutely clear”.

Listing out the quarterly GDP growth rates that dropped from 8% to 4.5% over the last six quarters, Chidambaram said the decline summed up the state of the economy.

The former minister said the economy could be brought out of the slowdown “but this government is incapable of doing that”. He said the Congress and some other parties were better equipped to pull the economy out of the slowdown and push economic growth. “But we have to wait for better times,” he said.

“The Prime Minister has been unusually silent on the economy. He has left it to his ministers to indulge in bluff and bluster. The net result, as The Economist put it, is that the government has turned out to be an ‘incompetent manager’ of the economy,” he said.

The government, he added, had been unable to look for the obvious clues because it is stubborn and mulish in defending its catastrophic mistakes like demonetisation, flawed GST, tax terrorism, regulatory overkill, protectionism, and centralized control of decision-making in the PMO.

“Government is calling the present slowdown ‘cyclical’. Thank god they have not called it ‘seasonal’. It is ‘structural’ and the government has no solutions or reforms that would address the structural problems,” he said.