Former Finance Minister P Chidambaram on Monday said that the most logical way to stimulate demand is to put money in the hands of a large number of people.
Speaking at an event here while analysing the budget, Chidambaram said, "The most logical way to stimulate demand is to give a large number of people more money."
"What has this budget done to stimulate demand? The most logical way is to give people more money. The people who need more money are not those who already have money. It is mass consumption that will stimulate demand and not elitist consumption," he said.
The Congress leader asked, "What is the state of the economy? For six quarters for which figures are available, growth has declined. After every quarter, the government said it will turn around in the next quarter. It is an alarming trend."
"CPI inflation has crossed 7 per cent, food inflation crossed 10 per cent. The economy is in distress. It requires a very radical approach," he said.
"To begin with, the doctor has to acknowledge the patient is ill. Unless the doctor faces the truth about the state of the patient how can the doctor prescribe a treatment," Chidambaram said in the context of the economic distress.
Stating that finances are greatly stressed and none of the engines of growth are firing, Chidambaram further said, "In the period of April-November, the mining sector declined by 0.1 per cent, coal declined by -5.3 per cent, gas declined by -3.1 per cent and refining by -1.1 per cent."
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"Imports declined by eight months in a row. Exports declined by five months in a row -- in every sector -- leather, handicrafts, cotton and sugar," he said.
"Therefore the Finance Minister should have asked her team that if this is the state of affair, give me a reason for this," Chidambaram further said.
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