“Government is prisoner of its own ignorance and fears”: Former Finance Minister P Chidambaram on economic package


Former Finance Minister P Chidambaram has said that the Centre’s Narendra Modi government was ‘a prisoner of its own ignorance and fears.’ He made these comments while reacting to the much-publicised economic package announced by Finance Minister Nirmala Sitharaman.

Chidambaram said, “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. Except for the modest MSME package, we are disappointed with today’s announcements.”

Chidambaram’s reaction came moments after Sitharaman shared details on the economic package announced by Prime Minister Narendra Modi during his address to the nation on Tuesday night. Key announcements made by Sitharaman had included extending the deadlines to file Income Tax returns and reducing employees’ PF contributions.

Chidambaram said that there was nothing for the poor in the announcements made by Sitharaman. He said, “Let me first point out that there is nothing, absolutely 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.”

Chidambaram added that there was also ‘also nothing, absolutely nothing by way of cash transfer to the bottom half of the population (13 crore families) who have been pushed into destitution.’ He said, “Only yesterday, Prof Thomas Pikketty pleaded for cash transfers to the poor. The FM announced some support measures for MSMEs, although my comment
is the measures were skewed in favour of the larger MSMEs (about 45 lakh MSMEs). I think the bulk of the 6.3 crore MSMEs were left high and dry. We welcome the offer of subordinated debt (Rs 20,000 crore) and equity corpus fund (Rs 10,000 crore), but we will await the ‘terms and conditions’. The devil is in the detail.”

Chidambaram continued, “On the credit guarantee fund, It is not the entire Fund that will be actually spent. The expenditure will be limited to the extent of NPAs in the outstanding
guaranteed credit to MSMEs. Assuming an NPA level of 20-50 per cent, the actual
expenditure over the period of the loans (which may be years)will be a maximum of Rs 3,00,000 crore.”

Meanwhile, Sitharaman has promised to address the media everyday for the next three days to share more details on her government’s efforts to revive the economy, which has taken a hit by the coronavirus pandemic.