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Collapse of consumption, return of labour to agri testimony to coverage 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.

Citing the ‘failure’ of the Centre in addressing the rise in unemployment, ‘reverse migration of workers to agriculture’, ‘persistent (high) 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 is pathetic that private consumption in 2021-22 so far is almost identical to private consumption in 2017-18,” he wrote. Consumer sentiment in August has considerably fallen as per the RBI and CMIE, he famous.

“The nation is shocked to find that in the last month (August 2021), unemployment rate has again shot up to 8.32%, which implies that 3.6 crore people are jobless today,” Mitra wrote. Citing an Azim Premji University examine, he mentioned practically half of the formal salaried staff have moved into casual work between late 2019 and late 2020.

Quoting the Centre for Monitoring Indian Economy (CMIE), Mitra mentioned that 60% of employment in manufacturing industries is within the unorganised sector. “ It is this labour force that is compelled to move to agriculture —a dangerous trend that will take years to reverse,” he mentioned.

Persistent inflationary pattern has additionally eaten into the meager consumption expenditure of the frequent individuals and has lowered their actual earnings, he famous.

“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.

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

It is a misplaced euphoria among the many Central authorities spokespersons on the GDP/GVA development in Q1 of this monetary yr, he mentioned. “I would like to point out that the growth of GVA in the Quarter-1 of this year represents a shortfall to the tune of 7.79% compared to 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 economic system’s gradual return to normalcy, of which there was some proof within the March quarter.

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