Over 30 years after PV Narasimha Rao opened up the Indian economy and ushered in path-breaking liberalization, the Congress Saturday called for a “reset” of the “economic policies” taking into account global and domestic developments. The party also lashed out at the BJP government’s management of the economy, but admitted the party has “failed” to communicate to the people the “distressful situation” of the Indian economy.
“A Congress-led government ushered in a new era of liberalization in 1991. The country has reaped enormous benefits in terms of wealth creation, new businesses and new entrepreneurs, a huge middle class, millions of jobs, exports and lifting 27 crore people out of poverty during a 10-year period. After 30 years, it is felt that taking into account global and domestic developments, it may be necessary to contemplate a reset of the economic policies, ”said former finance minister P Chidambaram, the convenor of the Congress panel deliberating economic issues at the Chintan Shivir in Udaipur.
Chidambaram said the “reset of economic policies must also address the questions of rising inequalities; extreme poverty among the bottom 10 per cent of the population; India’s rank in the Global Hunger Index 2021 (101 out of 116 countries); and evidence of widespread nutritional deficiency among women and children. ”
Chidambaram said 30 years have passed since the opening up of the economy in 1991. “The world has changed. India has changed. A reset means taking into account global and domestic developments and fine-tuning the policies that have obviously given us benefits. Clearly the time for a reset has come. ”
Asked whether the party was stepping back from liberalization, he said, “We are not stepping back. We are stepping forward post liberalization, taking into account global and domestic developments. ”
Chidambaram said a comprehensive review would also be justified by the health and education outcomes as revealed by the Annual State of Education Report 2021 (ASER 2021) and the National Family Health Survey-5 (NFHS-5). “We believe that a re-calibration of economic policies can influence health and education outcomes,” he said.
When asked whether the Congress has failed to communicate to the people the failures of the present government, he said, “You are right. We have failed to communicate to the people the distressful situation in which the country’s economy is. Yes, we admit that. We should sharpen our communication skills. ”
Chidambaram said the state of the Indian economy is a cause of extreme concern.
“A slower rate of growth has been the hallmark of the present government in the last 8 years. The post-pandemic recovery has been indifferent and halting. The growth estimates of 2022-23 have been lowered from time to time in the last five months. Inflation has risen to unacceptable levels, and threatens to rise further. WPI inflation is at 14.55 per cent and CPI inflation is at 7.79 per cent. The government is actually fueling the rise of inflation by its wrong policies, especially through high taxes on petrol and diesel, high administered prices and high GST tax rates, ”he said.
The job situation, he said, has never been worse.
“The Labor Force Participation Rate (LFPR) is at a historic low of 40.38 per cent and the unemployment rate stands at 7.83 per cent. We reiterate our charge that social services expenditure as a proportion of total expenditure has fallen to an average of 5 per cent (in 8 years) from an average of 9 per cent in the 10 years between 2004 and 2014, ”he said.
He admitted that the external situation has added to the pressures on the economy, but added that the government appears clueless on the ways to deal with these developments. He said as much as $ 22 billion has flowed out of the country in the last 7 months.
“The foreign exchange reserves have depleted by $ 36 billion. The exchange rate stands at Rs 77.48 to a dollar, the highest ever, ”he said.