Collapse of consumption, return of labour to agri testimony to policy failure: West Bengal finance minister Amit Mitra

Collapse of consumption, return of labour to agri testimony to policy failure: West Bengal finance minister Amit Mitra

“The Gross Fixed Capital Formation (GFCF) in Quarter-1 of 2019-2020 (before pandemic) was Rs. 12.3 lakh crore. This fell to Rs 10.2 lakh crore in Q1 of 2021-22 - a fall of investment by Rs 2.1 lakh crore, despite your numerous ‘packages' and corporate tax cuts,” he wrote.“The Gross Fastened Capital Formation (GFCF) in Quarter-1 of 2019-2020 (earlier than pandemic) was Rs. 12.3 lakh crore. This fell to Rs 10.2 lakh crore in Q1 of 2021-22 – a fall of funding by Rs 2.1 lakh crore, regardless of your quite a few ‘packages’ and company tax cuts,” he wrote.

Citing the ‘failure’ of the Centre in addressing the rise in unemployment, ‘reverse migration of employees to agriculture’, ‘persistent (excessive) inflation’ and ‘collapse’ of personal consumption, West Bengal finance minister Amit Mitra on Friday wrote to Union finance minister Nirmala Sitharaman, reiterating the necessity for guarantee money within the arms of individuals, to stimulate demand.

In Q1 of 2021-22, personal consumption, which constitutes 56% of the GDP, was 12% under the pre-pandemic degree of 2019-2020. “It’s pathetic that non-public consumption in 2021-22 up to now is nearly equivalent to non-public consumption in 2017-18,” he wrote. Shopper sentiment in August has considerably fallen as per the RBI and CMIE, he famous.

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“The nation is shocked to search out that within the final month (August 2021), unemployment price has once more shot as much as 8.32%, which means that 3.6 crore individuals are jobless right this moment,” Mitra wrote. Citing an Azim Premji College research, he stated almost half of the formal salaried employees have moved into casual work between late 2019 and late 2020.

Quoting the Centre for Monitoring Indian Economic system (CMIE), Mitra stated that 60% of employment in manufacturing industries is within the unorganised sector. “ It’s this labour drive that’s compelled to maneuver to agriculture —a harmful development that may take years to reverse,” he stated.

Persistent inflationary development has additionally eaten into the meager consumption expenditure of the frequent folks and has diminished their actual earnings, he famous.

“The Gross Fastened Capital Formation (GFCF) in Quarter-1 of 2019-2020 (earlier than pandemic) was Rs. 12.3 lakh crore. This fell to Rs 10.2 lakh crore in Q1 of 2021-22 – a fall of funding by Rs 2.1 lakh crore, regardless of your quite a few ‘packages’ and company tax cuts,” he wrote.

This fall in funding clearly demonstrates that the Centre’s provide facet coverage to spice up manufacturing has merely failed, he stated.

It’s a misplaced euphoria among the many Central authorities spokespersons on the GDP/GVA progress in Q1 of this monetary yr, he stated. “I want to level out that the expansion of GVA within the Quarter-1 of this yr represents a shortfall to the tune of seven.79% in comparison with the Quarter 1 of 2019-2020.”

India’s gross home product (GDP) grew 20.1% within the June quarter from a yr earlier than, giving the phantasm of a pointy financial restoration, but it surely was largely pushed by a deeply-contracted (-24.4%) base. In absolute time period, actual GDP nonetheless trailed the pre-pandemic (June quarter in FY20) degree by 9.2%, because the resurgence of Covid-19 infections hobbled the financial system’s gradual return to normalcy, of which there was some proof within the March quarter.

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