Chidambaram said development had indeed "gone crazy" in Gujarat, and criticised the BJP government in the state for leading what he called a "skewed, unfair, unjust and inequitable growth".
He also came down heavily on the Centre's bullet train project whose foundation was laid by Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe in Ahmedabad recently.
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"The only regret in my life is that I was never a finance minister in a government with absolute majority," he told businessmen at a function organised by the Congress party at Gujarat Chamber of Commerce and Industry (GCCI).
Referring to the massive majority the BJP-led NDA had in the Lok Sabha, he said anything could have been done with that kind of mandate.
"We could have completely reformed the finance sector, we could have passed the direct taxes code, we could have passed a near perfect GST. With that kind of majority, any laws could have been changed. Anyway, that did not happen," he said.
Attacking the state's BJP government, he said Gujarat's gross state domestic product was less than those of Maharashtra and Tamil Nadu, and was falling year after year since 2012-13.
He said the per capita income of Gujarat was also lower than those of Maharashtra and Tamil Nadu, and almost same as a small state like Kerala.
Gujarat's social sector expenditure was 66.76 per cent while states like Tamil Nadu, Maharashtra, Kerala, and Karnataka were spending more than that, he said.
"The population growth rate between 2001-2011 is much higher, your literacy is lower, life expectancy is lower, poverty ratio is higher, infant mortality is higher, sex ratio is very poor at 919 girls per 1000 boys.
"It means that growth in Gujarat is skewed, it is not a fair and just growth, it is not an equitable growth," the former Union minister said.
Attacking the Centre over the bullet train project, he said the burden of the investment of nearly Rs 1 lakh crore will fall on the future generations, as the loan amount will have to be paid back according to the exchange rate prevalent then.
"We are building a bullet train, which will take a maximum of 700 people once a day from Ahmedabad to Mumbai, and from Mumbai to Ahmedabad. But somebody has to repay the loan, don't forget that. There will be no interest on that, but there will be exchange rate. You will have to pay in Japanese yen. And who will have to pay? Your children, my children," he said.
He also termed demonetisation as a "major blow to India's economy," and said that Goods and Services Tax (GST) in its present form was actually like giving a "bad name" to the new indirect tax regime.
"What kind of GST is this? Why do you call it GST and give a bad name to GST? World over, GST is one rate. What will happen if you give garland to a monkey?" Chidambaram asked the audience.
Referring to a social media campaign by the Congress in the poll-bound state, Chidambaram said,"When some of you say 'vikas gando thayo chhe' (development has gone crazy), you are absolutely right.