Amit Mitra apprehends India heading towards 'stagflation'

Kolkata: Amit Mitra, Bengal's former finance minister and current chief advisor to Chief Minister Mamata Banerjee on Monday expressed his apprehensions of India heading towards "stagflation" with the country already suffering from rising inflation and unemployment simultaneously.

"Wholesale inflation is 14.2 per cent and 'unemployment' has expanded by 10.48 per cent. The private investment has also increased hardly so there is every possibility of the country heading toward stagflation," Mitra said, speaking virtually at the CFO Leadership Summit, organised by the Institute of Cost Accountants of India.

Stagflation is defined as situation with persistent high inflation combined with high unemployment and stagnant demand in a country's economy. He blamed the faulty economic policies of the Union government that had began with demonetisation in 2016, followed by the introduction of a complex Goods and Services Tax (GST) without any preparation or proper planning. " The wrong policies to manage the economy in Covid times had also failed to boost private investment or empower people to spend more," Mitra rued.

He pointed out the stark contrast in case of Bengal which according to him adopted the right policies like lowering of stamp duty on registration by 2 per cent and reduced circle rate by 10 per cent which resulted in the real estate industry getting a good pick up. "This led to a positive state GDP growth of 1.2 per cent when the country had a negative growth of 7.7 per cent in 2020-21 fiscal," Mitra added.

He maintained that the Union Finance minister has recently accepted that private investment is not happening and has asked different departments to spend so that funds allocated to them are utilised.

"Capital expenditure have a time lag period and pressure tactics often leads to misuse or overuse. I have written to the Finance Minister on more than one occasion stating that we need immediate spending and for that the government has to give money directly into the hands of the people. But she did not act, " Mitra said.

He regretted that as a result of such faulty policies India has ranked among the most unequal country in the World Inequality Report 2022, where the bottom 50 per cent has a share of just 13 per cent while the top one per cent of the population controls 22 per cent of the national income.