Rising unemployment, inequality calls for re-setting neoliberal economic policies: Congress

In an apparent indication that the Congress is “turning left,” the three-day Chintan Shivir in Udaipur has decided to come up with concrete proposals to “re-set” the neoliberal economic policies ushered in by the Congress-led government in 1991.

Briefing reporters in Udaipur on Saturday, former Finance Minister P Chidambaram said taking into account global and domestic developments, rising inequality and unemployment, the party has decided to contemplate a re-set of the economic policies.

He said 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. But after 30 years, it is felt that the policies need to be re-set.

When asked about the specific plans for this re-set, he said the Shivir will come up with such proposals. “Our thinking is 30 years down the line, while we acknowledge that we have reaped enormous benefits as a result of liberalisation. We take into account global domestic developments and reset our policies for the next 10-20-30 years,” he said.

‘Policy re-set should address rising inequalities’

Chidambaram said the re-set of economic policies must 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.

“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.

The former Finance Minister said the time is also ripe for a comprehensive review of Centre-States fiscal relations. “The consequences of the poorly-drafted and unfairly-implemented GST laws brought in by the Modi Government in 2017 are there for every one to see. The States’ fiscal position is fragile as never before and needs urgent remedial measures,” he said.

Chidambaram said the country must prepare the Indian economy and the Indian workforce to adapt to the ways in which industry, business and trade will be conducted in the 21st century with the greater use of automation, robotics, machine learning and artificial intelligence. “We believe that important changes in economic policies will be required in the light of climate change and the need for mitigation and adaptation,” he added.

‘Economy a cause of extreme concern’

Chidambaram said the conclusions of the initial discussions in the 60-member group on economy is that 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 eight 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,” Chidambaram said.

The party also viewed that 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. The job situation has never been worse. The Labour Force Participation Rate (LFPR) is at a historic low of 40.38 per cent and the unemployment rate stands at 7.83 per cent,” he added.

He said the external situation has added to the pressures on the economy. “The Government appears clueless on the ways to deal with these developments. $22 billion has flowed out of the country in the last seven months. The foreign exchange reserves have depleted by $36 billion. The exchange rate stands at ₹77.48 to a dollar, the highest ever,” he said.

On GST compensation, he said the period of five years that will expire on June 30 must be extended by at least another three years. “We would strongly disapprove if any attempt is made by the Centre or the Union Finance Minister to rail road the GST council and prevent it from recommending an extension of the GST compensation period by another three years,” he said.