Senior Congress leader P Chidambaram on Saturday said the Reserve Bank of India (RBI) should “bluntly tell the government to do its duty and take fiscal measures” to revive the economy that has been battered by the Coronavirus pandemic.
“Governor Shaktikanta Das says demand has collapsed, growth in 2020-21 headed toward negative territory. Why is he then infusing more liquidity? He should bluntly tell the government ‘Do your duty, take fiscal measures’,” Chidambaram said in a tweet.
In another tweet, he asked Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman to rethink the Rs 20 lakh crore relief package that “has fiscal stimulus of less than 1 per cent of GDP”.
“Even after RBI’s statement, is the PMO or Nirmala Sitharaman lauding themselves for a package that has fiscal stimulus of less than 1 per cent of GDP?” he asked.
Chidambaram further said the “RSS should be ashamed of how the government has dragged the economy into negative growth territory”.
His comments come a day after RBI Governor Shaktikanta Das informed that the GDP growth in 2020-21 is expected to remain in the negative category with some pick up in second half.
To mitigate the economic impact of COVID-19 outbreak, the Reserve Bank of India (RBI) on Friday again reduced the key lending rate by historic levels of 40 basis points from 4.4 per cent to 4 per cent.
Repo rate is the key interest rate at which the RBI lends short-term funds to commercial banks.
The reverse repo rate has also been reduced to 3.35 per cent.
Besides reducing the key lending rates, the apex bank took other major decisions keeping in mind the devastating economic impact of COVID-19 pandemic.
In one such decision, the RBI has extended the moratorium on interest payments on all term loans for another three months. It also allowed for repayment of accumulated interest on account of the moratorium through FY21.
The RBI governor, in his address, said that industrial production shrank by close to 17 per cent in March with manufacturing activity down by 21 per cent. Output of core industries have contracted by 6.5 per cent.
However, he pointed out that amidst this encircling gloom, agriculture and allied activities have provided a beacon of hope on the back of an increase of 3.7 per cent in food grain production to a new record.
Das also said that the pandemic has severely impacted the global economy, including India’s. He said that the Coronavirus pandemic has dealt a crushing blow to the demand.