Coronavirus: RBI’s report confirms what I have been warning for months, says Rahul Gandhi
The Congress leader said the government should spend more instead of lending more and restart the economy by reviving consumption.
Congress leader Rahul Gandhi on Wednesday said the Reserve Bank of India’s predictions about the economic contractions amid the coronavirus pandemic was a confirmation of what he had been warning for months.
In its annual report for 2019-’20 published on Tuesday, the central bank said the pandemic could cause a structural downshift in the potential output of the Indian economy. The report said the contraction in the economy could continue into the second quarter of 2020-’21, i.e. July-September mainly because of the localised lockdowns that were reimposed to contain the infection.
The report also pointed out that the poorest have been hit the hardest and said that because of the severe shock to consumption, the economy will take “quite some time” to mend and regain its pre-Covid momentum.
“RBI has now confirmed what I have been warning for months,” Gandhi tweeted. In a fresh barb at the government, Gandhi said that “creating distractions through media” will neither help the poor nor make the economic disaster disappear.
The Congress leader also listed out some immediate measures, which he said the government needs to take in order to control the situation. He said the government should spend more instead of lending more and restart the economy by reviving consumption. Gandhi added that the Centre should give money to the poor and “not tax cuts to industrialists”.
Gandhi has repeatedly attacked the Modi-led government over the past few months over its handling of the coronavirus outbreak in India. Last week, the Congress leader had warned that India will not be able to provide jobs to its youth because of the severe economic impact of the coronavirus. He claimed that his predictions would come true within six to seven months.
On August 9, he claimed that Modi had failed to provide the two crore jobs every year that he promised. He also accused the prime minister of enacting policies that “destroyed India’s economic structure”, and left many people jobless.
Since the pandemic shut businesses in March, unemployment in the country has surged sharply. On Monday, a report by the Centre for Monitoring Indian Economy said nearly 50 lakh salaried persons lost their jobs in July as a result of a partial lockdown.
The finance ministry, in a report released on July 6, said that India’s Gross Domestic Product is expected to contract 4.5% in the 2020-’21 financial year as predicted by the International Monetary Fund. The ministry cited the “unprecedented Covid-19 induced supply-demand shocks” for the downward revision of the economic growth.
The Reserve Bank of India’s earlier projections have also shown that India’s Gross Domestic Product will contract in 2020-’21.
The Narendra Modi-led government imposed a complete lockdown in the country from March 25 to April 19, banning all except essential activities. From April 20, very limited economic activities were allowed to resume. In June, the government began the “Unlock 1” phase, slowly reopening the economy and devolving decision-making power to the states.