Centre should work with States to combat economic slowdown: Asim Dasgupta

first_imgVeteran CPI(M) leader Asim Dasgupta, who served as West Bengal’s Finance Minister for nearly quarter of a century — the longest one has held the portfolio in India or any democratic country — on Thursday said the BJP had more competent people [than the incumbent] to run the Finance Ministry and that the Centre should work together with the States in combating the economic slowdown.Mr. Dasgupta, however, declined to name the “more competent and flexible” candidates he had in mind, saying that would amount to commenting on the matters of another party. But he said this was the time for the Centre to send a positive signal to States that “Let’s work together.”“The current economic slowdown has resulted from the fall in the purchasing power of the common people. In economics, we call this power ‘effective demand’,” said Mr. Dasgupta, who is a product of the Massachusetts Institute of Technology and served as the State’s Finance Minister from 1987 to 2011.“What the government needs to work on is improving the demand and not supply. The measures taken by it in the recent times, such as announcing a corporate tax relief of ₹1.45 lakh crore, is aimed at improving supply. How will more supply help when there is no demand?” he asked.He said a primary reason behind the decline in the purchasing power was the overnight demonetisation. “The Prime Minister should have taken the RBI into confidence and got new ₹500 and ₹1,000 notes printed well in advance before making the announcement,” he said. According to him, the lack of timely availability of the new notes had a direct bearing on the purchasing power of the common man.Mr. Dasgupta, who was instrumental in initiating land reforms in Bengal, suggested a series of measures the Centre could undertake to increase the ‘effective demand’. One of them is, of course, land reforms (fixing a ceiling on the amount of land that can be held by an individual and distributing the excess land to the landless) because smaller lands, according to him, are better utilised. He also called for a hike in the fair price charged by farmers.But among the things that are immediately “doable”, he said, is an allocation of an additional ₹10,000 crore to the irrigation sector (to the current ₹9,900 crore); a 10% hike on the food subsidy of ₹1.7 lakh crore; pumping in another ₹40,000 crore to MNREGA (current budget ₹60,000 crore) and spending ₹15,000 crore on an MNREGA-type programme for the urban population.“These measures, if you do the math, will cost about ₹1 lakh crore. Now the question is where will this money come from? It can come from the ₹1.45 lakh crore that has been set aside — but not yet handed out — as corporate tax relief,” Mr. Dasgupta said.The economist-politician, who chaired the empowered committee that drafted the GST (he headed it from 2000 to 2010), is all for the GST but said the combined tax rate should not exceed 20% and that its imposition should have been withheld until computerisation had reached every corner of the country. “Small traders are not familiar with the procedures, so there is unintentional leakage in the tax, which defeats the purpose of such a tax,” he said.last_img

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