Bengal FM tells Sitharaman her supply-side policies have 'utterly failed'

Asks her to restrain 'spin doctors' from giving misleading picture of the economy

A day after North Block exuded confidence about the economic recovery, West Bengal finance minister Amit Mitra shot off a letter to the union finance minister Nirmal Sitharaman asking her to change direction of her policies to boost demand as the common people are reeling under the economic distress of high unemployment and inflation.  

"Your government's supply side policies have utterly failed. The common people are being hit from multiple directions. This is a tragic outcome arising from your government's utterly wrong macroeconomic policies," Mitra told Sitharaman in the letter.

He said the common people are suffering from "deep" distress which is likely to deepen further over the coming year.

Mitra rolled out statistics to prove his point. For instance, he said the unemployment rate has again shot up to 8.32 per cent in August 2021 which implies that 36 million people are jobless today. "This is one and a half times the entire population of Australia," Mitra gave a simile.

He said an unprecedented reverse migration of workers is taking place in the country today from factories to farms. The Centre's periodic labour force survey itself shows such reverse migration to agriculture is cutting salaries of workers by half.

He quoted the Centre of Monitoring Indian Economy (CMIE) data that 60 per cent of employment in manufacturing is in the unorganised sector to buttress the point that it is this labour force that is compelled to move to agriculture. "(This is) a dangerous trend that will take years to reverse," he said.

He also gave data on inflation--the wholesale price index rose by 12.13 per cent and consumer price index crossed the "danger line of the RBI by posting 6.06 per cent rise on an average in May June and July of the current financial year-- to say that it has eaten into the already meagre consumption expenditure of the common people".

He said private consumption is collapsing, demonstrating the underlying despair of the common people.

He also cited data on investments to bring home the point that businesses lack the confidence to invest despite corporation tax rate cuts and incentives for bank credits.

He termed the euphoria over 20.1 per cent GDP growth and 18.8 per cent GVA growth in the first quarter as misleading. "I would like to point out that the growth of GVA in the quarter-1 of this year represents a shortfall to the tune of 7.79 per cent compared to the quarter 1 of 2019-20. Therefore I would request you to restrain your spin doctors so that the reality is states with utter objectivity."