Oil price spike may hurt economy more, warns Chidambaram

Updated - January 06, 2020 10:48 pm IST

Published - January 06, 2020 10:21 pm IST - New Delhi

Former Union Finance Minister and architect of the Congress party’s manifesto P. Chidambaram. File

Former Union Finance Minister and architect of the Congress party’s manifesto P. Chidambaram. File

Former Finance Minister P. Chidambaram on Monday warned that the Indian economy could face more turbulence if oil prices rose further amid mounting U.S.-Iran tensions and contended that the government was “clueless about the economy even as it is sinking”.

“I do not think, they have the wisdom to deal with a situation like in 1991; so, God forbid, that we go back to 1991,” he asserted, speaking to reporters on the possibility of a military flare-up in West Asia, and its likely impact on crude prices.

“While the fire lit by the hurried passage of CAA rages across the country, the economy continues to sink. There has not been a single silver lining in the last six months,” he said, observing that imports had declined by 8.37% and exports had shrunk by 2.21% compared to last year.

“The fiscal deficit will breach the budget limit of 3.4%. WPI is at 1.92% and CPI at 5.54%. Food inflation has crossed 10%. As warned, the cut in corporate tax rates did not boost investment. Private consumption declined significantly,” he said and added, “I have no expectations from this government’s economic policies”.

He said direct tax revenue collections were only 41.6% of the budget estimates and the credit growth to industry was 3.4% while manufacturing output had shrunk by 3.8%.

“The government has run out of money to spend or invest in the last quarter of 2019-20. It is obvious that the government is clueless and seems to think that ignorance is bliss,” Mr. Chidambaram asserted.

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