On RBI's Annual Report, P Chidambaram taunts Centre for 'royally ignoring' Shaktikanta Das

On Wednesday, former Union Finance Minister P Chidambaram lashed out at the Centre over the economic situation portrayed in the RBI's Annual Report 2019-20. Claiming that RBI Governor Shaktikanta Das' suggestions were being ignored by the Union government, he extended his sympathies to the former. Expressing the possibility of lack of communication between the RBI Governor and Union Finance Minister Nirmala Sitharaman, he called for multiple copies of the RBI's Annual Report to be sent to Prime Minister Narendra Minister and every other Cabinet Minister.

According to Chidambaram, it was difficult to expect course correction as the Centre was refusing to acknowledge the reality of the economic situation in India. In the last few weeks, Congress leaders have often raised concerns about the state of the economy amid the COVID-19 crisis. Currently, there are 32,34,474 confirmed novel coronavirus cases in India out of which 24,67,758 patients have recovered while 59,449 fatalities have been reported. 

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RBI's Annual Report 2019-20

As per the RBI's Annual Report, the COVID-19 pandemic has exposed the inequities in the country's economy. For instance, it pointed out that the hospitality and tourism sector has witnessed more job losses than in other areas. Stressing that the poor had been hit the hardest, the RBI also mentioned that urban consumption had suffered a huge blow with a significant dip in passenger vehicle sales and supply of consumer durables in the first quarter of 2020-21. While the movement of people around groceries and pharmacies has reached pre-COVID levels, the mobility pertaining to retail and recreation is nearly 60% lower than that of February 2020 level.

Additionally, the RBI stated that the sharp cut in the corporate tax rate announced by the Centre has not helped in restarting the investment cycle as intended. Observing that the corporate tax regime reform had not gained traction in boosting capital expenditure, it recommended "targeted public investment funded by monetisation of assets in steel, coal, power, land, railways and privatisation of major ports by central and state governments under an independent regulator". Furthermore, the RBI suggested the formation of GST Council-like apex authorities in respect of land, labour and power to ensure structural reforms and speedy implementation of infrastructure projects.

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