Amit Mitra, former West Bengal finance minister and current chief advisor to Chief Minister Mamata Banerjee, said Monday he feared India could head towards stagflation.
The trained economist Mitra said that India was already suffering from rising inflation and simultaneous unemployment.
Wholesale inflation is 14.2 percent and unemployment is up 10.48 percent. Now, with no private investment (increasingly), we could be heading for stagflation, said Mitra, who spoke virtually at the CFO Leadership Summit organized by the Institute of Cost Accountants of India.
Stagflation is defined as a situation of persistently high inflation combined with high unemployment and stagnant demand in a country’s economy.
Mitra said India was in such a precarious situation due to a “flawed economic policy” by the Union government, which began demonization in 2016, followed by the introduction of a complex tax on goods and services, “and now a wrong policy to manage the economy in Covid” Confronted are times that neither stimulate private investment nor enable people to spend more. “
Infrastructure investments (which the government uses) will have a time lag and we need immediate spending and for that the government needs to put money straight into the hands of the people. The Union Finance Minister accepts that there will be no private investment and urges various departments to stimulate (public) investment, but this will not bring immediate results, he said.
Regarding West Bengal, Mitra claimed the state “took the right steps”, including lowering stamp duty and circular rates, to stimulate private sector investment, resulting in “positive government GDP growth of 1.2 percent, when the country had a decline – growth of 7.7 percent in FY21.
Many countries poured money into their people’s hands to revitalize their economies, he said. However, this has not been replicated in India.
As a result, “India is one of the most inequality countries in the World Inequality Report 2022, where the top 1 percent of the population now controls 22 percent of national income and the bottom 50 percent only has 13 percent of the country’s income,” said India the former state finance minister.
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