A day before presentation of Economic Survey, former Prime Minister Manmohan Singh today painted a bleak picture of the Indian economy insisting "it is not in good shape" while former Finance Minister P Chidambaram said the government is "hiding behind" GDP numbers that are being challenged.
Releasing the "Real State of Economy 2017", a document prepared by the Congress research cell at the party headquarters here, Singh said it speaks about the state of India's economy, its many issues and where it is heading.
"That the Indian economy is not in a good state is obvious. Even IMF has downgraded our GDP growth and it will not be 7.6 per cent but less than 6.6 per cent," he said.
Chidambaram said the state of the economy "is not something that we can be happy about" and expressed concern over the low credit growth which he claimed is at 5 per cent, the "lowest in several decades".
"BJP is hiding behind a GDP number which is being challenged. People are not dazzled by it, but are asking where are the jobs?
"NDA government tends to believe exaggerated version of economy, this research document is closer to truth than what government will say tomorrow," he said.
Chidambaram said every government must be optimistic, but optimism must stem from a realistic assessment of situation.
"Yet, if government presents tomorrow a rosy picture of the economy, people of India are entitled to question that. There are no jobs, capital formation is declining, credit growth is the lowest in several decades," he said.
Chidambaram wanted government to focus on fiscal consolidation and said, "there are serious question marks on this government's ability to follow fiscal prudence".
He dismissed suggestions that the 2008 farm loan waiver was a populist measure, saying, "It was based on the response to a demand from the farming community and was a very wise decision."
"This was especially so as the international financial crisis hit in September 2008, which crippled even major economies but did not affect India much," he said.
He claimed that while there are no jobs, new capital investment and no credit growth, the document released "candidly, truthfully" assesses the state of India's economy, supported by hard research and data.
Hoping that government will not cut social sector spending, the former Finance Minister claimed that the MNREGS was the lone scheme that provided some succour to poor by way of jobs.
"There is a 60 per cent spurt in demand for MNREGS jobs. If they are cut, then it would be a very cruel cut. This demand is because of loss of jobs and. I sincerely hope that this government will not make this cardinal mistake of cutting expenditure," he said.
Congress spokesperson Rajiv Gowda said, "The slowdown in the Indian economy in the wake of demonetisation will last four to five years."
He told the government that it should not use the issue of universal basic income tax an excuse to attack social safety net.
(Reopens DEL 73)
On a question on imposition of banking transaction tax as proposed by a panel of chief ministers, Chidamaram said the idea has its "expiry date" and "it's not a good idea in 2017".
The government had introduced 0.1 per cent Banking Cash Transaction Tax (BCTT) in 2005 on cash withdrawals of more than Rs 50,000 (individuals) and Rs 1,00,000 for others in a single day from non-savings bank account maintained with any scheduled bank.
The tax was, however withdrawn three years later.
A panel of chief ministers, looking into ways to promote digital transactions, recommended a ban on cash transactions beyond a certain limit and a tax on payments beyond Rs 50,000.
The Congress survey says that it is time the government woke up to the frustration that is building among India's youth and is manifesting itself partly in various agitations around the country, in view of jobs deficit.
"Instead of addressing this issue, Prime Minister Modi chose to launch a nuclear first strike on the Indian economy through demonetisation. A slowly recovering economy found itself stunned when the Modi government jammed the brakes on India's growth.
"In terms of the impact of demonetisation, a range of experts have produced an array of estimates about the extent of the slow down: from 1 pc to more than 2 pc, over six months to over five years. Every percentage point drop in Gross Domestic Point (GDP) growth costs the country 1.5 lakhs of crores of rupees," he said.
The survey also said "Our aim is to shine a light on the areas where the government has faltered in its management of the economy so that it can correct course and put India back on a positive growth trajectory once again."
Gowda said new investment proposals have been dropping in last few years and many startups have been forced to shut down bcz of poor policies.
"Gross fixed Capital formation has bottomed out. It's negative. There has been a spurt in train derailments, which have increased to 62," he said, adding that in 2010, 11 lakh new jobs were created which have fallen to an abysmal 1.35 lakh jobs under Modi government.
"The most crucial deficit facing India is a job deficit It has data which the Govt does not want you to know. As a responsible Opposition we decided to bring out a document on the functioning of the Economy," he said.
