Senior Congress leader P Chidambaram on Wednesday expressed disappointment with the finance minister's announcements, saying the Centre's COVID-19 economic stimulus package has nothing for lakhs of poor and hungry migrant workers who have been walking to their home. Addressing a press conference through video conferencing, he said the central government announced Rs 3.6 lakh crore of collateral-free loans for small businesses, but “where is the remaining Rs 16.4 lakh crore?”
"Except for the modest MSME package, we are disappointed with today's announcements," Chidambaram said, adding there was nothing for the poor or the middle class in the package.
Asked if the measures announced would help propel demand, he said, "I do not find anything in this package that could stimulate the demand.”
The former finance minister also said changes in labour laws by some BJP-ruled states was done at a wrong time, saying they have set a “wrong precedent”. He said Union Finance Minister Nirmala Sitharaman announced some support measures for Micro, Small and Medium Enterprises (MSMEs), although the measures were skewed in favour of the larger MSMEs (about 45 lakh such units). "I think the bulk of the 6.3 crore MSMEs were left high and dry," he said. Noting that the "devil is in the detail", Chidambaram said he welcomes the offer of subordinate debt (Rs 20,000 crore) and equity corpus fund (Rs 10,000 crore), but will await the 'terms and conditions'.
On the credit guarantee fund, he said the expenditure will be limited to the extent of non-performing assets (NPAs) in outstanding guaranteed credit to MSMEs. Assuming an NPA level of 20-50 per cent, the actual expenditure over the period of loans (which may be years) will be a maximum of Rs 3,00,000 crore, he said, adding after counting the Rs 30,000 crore credit guarantee to NBFCS, the total comes to only Rs 3.6 lakh crore.
"Where is the rest of the Rs 16.4 lakh crore? This government is a prisoner of its own ignorance and fears. The government must spend more, but it is not willing to do so. The government must borrow more, but it is not willing to do so. The government must allow states to borrow more and spend more, but it is not willing to do so," he asserted.
The senior Congress leader said the first thing the government needs to do is to put money in the hands of 13-crore families in the bottom of the population that will cost the government only Rs 65,000 crore, if Rs 5,000 is given to each family.
"There is nothing in what the FM said today for the lakhs of poor, hungry and devastated migrant workers who have walked - and many thousands are still walking - back to their home states. This is a cruel blow dealt to those who toil every day," he said.
Chidambaram noted that there is nothing by way of cash transfer to the bottom half of the population (13 crore families) who have been pushed into destitution.
He also cited French economist Thomas Piketty's suggestion to India that cash transfers need to be made to the poor to make the lockdown work.
On Prime Minister Narendra Modi's talk about life and livelihood, he said there is no contradiction between the two.
"We must protect our lives, but millions of people have been pushed to destitution," he said.
The former Union minister also called upon the government to address the issue sectorally and provide fiscal support to each sector of the economy, “as Congress would have done”.
He said the prime minister announced an economic stimulus package to re-start the stalled economy and stated that its size will be Rs 20 lakh crore.
"As expected, and as perhaps it was intended by the government, it grabbed the headline. The page, however, was blank," he said.
Chidambaram said even as lockdown will continue in a different form, the broad contours will be laid by the central government and the rest will be done by states.
"But life and economy has to start," he added.Follow our full coverage of the coronavirus pandemic here.