Speaking at the Infocom IT, Mitra said unlike economies of the US, the UK and Japan, the Centre has not felt the need to go for capital expenditure.
Amit Mitra said an increase in government expenditure will cause a multiplier effect on the economy. (Photo Source: IE)
Criticising the Centre for “not doing enough” to address the economic problem arising out of the COVID crisis, West Bengal finance and industry minister Amit Mitra on Saturday said it should have spent more to boost demand in the country.
Speaking at the Infocom IT here, Mitra said unlike economies of the US, the UK and Japan, the Centre has not felt the need to go for capital expenditure.
“When the COVID-19 pandemic hit the economy, what should have triggered in the mind of the government is the Great Depression which has happened. What should have been done is to follow the Keynesian model of government expenditure to boost demand as the private sector is unable to do that,” Mitra said.
He said an increase in government expenditure will cause a multiplier effect on the economy.
The Great Depression was the worst worldwide economic downturn that lasted for 10 years from 1929, beginning in the US when the New York Stock Exchange on Wall Street crashed and wiped out millions of investors.
“There are structural issues and the IT and ITeS sectors are not outside this framework. India’s GDP growth had been falling. Earlier, there were demonetisation and the half-baked GST, which have not been successful and no analysis has been done by the government,” Mitra said.
Exports and bank lending are falling, he said, adding that “there are the whole set of negatives in the structural domain”.
Declining to term the present situation as new or next normal as widely used by many, Mitra said, “I have a difference of opinion. People have been saying this without a question mark.
“My answer is no. But some things have certainly changed. We will go back to where we started from. There will be some changes though. Unless some more unforeseen things happen, 90 per cent of the business will return to the previous level.”
This is a blip which will create new dynamics, he added.
“Can manufacturing, tourism happen virtually? Board room meetings cannot take place virtually when complex decisions are taken,” he said.
In India, 93 per cent of employment is in the unorganised sector. After demonetisation, it is the MSME and the unorganised sectors which were hurt most.