India’s main opposition Congress party has come out strongly against the federal government headed by Prime Minister Narendra Modi, saying its warnings from the beginning of the lockdown on the economy have now been endorsed by the Reserve Bank of India (RBI).
“RBI has now confirmed what I have been warning for months. Govt needs to: Spend more, not lend more. Give money to the poor, not tax cuts to industrialists. Restart economy by consumption. Distractions through media won't help the poor or make the economic disaster disappear,” said Rahul Gandhi, former Congress Chief in a tweet on Wednesday.
RBI has now confirmed what I have been warning for months.— Rahul Gandhi (@RahulGandhi) August 26, 2020
Govt needs to:
Spend more, not lend more.
Give money to the poor, not tax cuts to industrialists.
Restart economy by consumption.
Distractions through media won't help the poor or make the economic disaster disappear. pic.twitter.com/OTDHPNvnbx
The RBI said that in order for there to be an economic recovery, private spending has to rise in discretionary sectors like transport, hospitality and recreation. All these sectors have remained under lockdown or partial lockdown since 25 March.
The bank said that while white collar employees could work from home, essential workers have to work on site, exposed to the risk of getting infected. “The poorest have been hit the hardest,” it said.
India had rolled out an economic stimulus package to the tune of US $266 billion in May this year to tackle the challenges posed by the pandemic. In addition, the RBI too has injected US $127 billion into the country’s financial system since February to keep it afloat.
The federal government’s data revealed that a large part of its budged spending for the entire fiscal year – 1 April 2020 to 31 March 2021, was provided during the first three months.
India's fiscal deficit (the difference between total income and total expenditure) in the first three months of the current financial year stood at US $88.26 billion. This was 83.2 percent of the budgeted amount for the current fiscal year.
According to a report by the International Labour Organisation and the Asian Development Bank, as many as 4.1 million youth in the country lost jobs due to COVID-19, mostly in the farming and construction sectors.