Amit Mitra advises Union FM to switch to demand stimulation to revive Indian economy
Questioning the “utterly wrong macroeconomic policies” of the Narendra Modi government, the Bengal Finance Minister Amit Mitra, in a letter to his Union cabinet counterpart Nirmala Sitharaman, has highlighted issues like “chronic unemployment, reverse migration of workers, persistent inflation and collapse of private consumption” and others.
At the very outset, Mitra, in the letter sent on Thursday, said, “I would like to draw your kind attention to the deep distress that common people of the country are facing today. This distress is likely to deepen further over the coming year.”
Highlighting the issue of unemployment, he said: “In August, the unemployment rate had shot up again to 8.32 per cent which implies that 36 million (3.6 crore) people have lost jobs. In other words, 36 million people in India have no jobs and have no earnings. This is one-and-a-half times the entire population of Australia. In fact, Azim Premji University study reveals ‘nearly half of the formal salaried workers have moved into informal work between late 2019 and late 2020’—shocking indeed.”
Pointing out that unprecedented reverse migration of workers is taking place in India today, from factories to farms, the latter said: “We are reminded by Centre for Monitoring Indian Economy (CMIE) that 60% of employment in manufacturing industries is in the unorganized sector. It is this labour force that is compelled to move to agriculture—a dangerous trend that will take years to reverse.”
Amit Mitra then moved on to pointing out that the “rising trend of inflation” is cutting into the meagre consumption expenditure and reducing the real income of the people. “Such persistent inflammatory trend has eaten into the meagre consumption expenditure of the common people and has reduced their real income,” he said.
“It is also evident that private consumption is collapsing, demonstrating the underlying despair of the common households. At the same time, corporate of all sizes are holding back from investing in the economy as they do not see demand picking up in the near future,” he added.
Citing GDP data, Mitra said, “It is pathetic that private consumption in FY22 so far, is almost identical to private consumption in FY18—four years ago (according to CMIE). In fact, the RBI’s Current Situation Index dropped to a record 48.5 per cent in May 2021 from 53.1 per cent in March 2021. This demonstrates the deep pessimism among the customers of our nation.”
The “cruel rise of price of petrol, diesel and two consecutive increases in quick succession of cooking gas cylinders” has increased plight of common people, he said, urging Sitharaman to “imagine the plight of the common people in general and our homemakers in particular”.
Amit Mitra has, in the past, written several letters to Nirmala Sitharaman on economic issues concerning the country.
He continued, “I have humbly tried to bring to your kind attention the pathetic plight of the common people hit by at least five factors as elucidated above with data. I have also tried to bring to your attention the unprecedented reverse migration of workers from manufacturing to the agricultural sector which has been forced upon them, leaving no option.”
Saying the government’s supply-side measures to revive the COVID-19-hit Indian economy had failed, Mitra referred to his earlier communication dated August 9, 2021, where he had urged the Union finance minister to switch to demand stimulation and provide money in the hands of the people, like what is being done by the Bengal government.
