New Delhi: The stagnating Indian economy is at the verge of stagflation and the Bharatiya Janata Party (BJP) government is in a denial mode, according to the Congress.
Addressing the media at the party headquarters, here on Monday, Congress spokesperson Supriya Shrinate said, "2020 holds little promise given the precarious state of the economy with the gross domestic product (GDP) growth below 6 per cent and inflation around 7.5 per cent. The time for empty talks is over.".
She said the Union Budget for 2020-21 was being presented at a time when the economy was deep into a slowdown.
"The consequences of stagflation are precarious. It will stoke inflation higher, deepen the slowdown, stall investments that are at 27 per cent of the GDP and erode jobs," Shrinate said. As per the data, 3.4 crore jobs across seven main economic sectors were lost in the last five years, she added.
It would aggravate the acute rural stress and further dampen consumption, she said.
"This vicious cycle of downward economic spiral is worrisome," she said. Because the government continued to be in "denial", slowly what was essentially a demand problem was turning into a supply issue as well. "The Indian economy can ill afford this double whammy," the Congress leader said.
"The drop in direct tax revenue for the first time in 20 years makes the fiscal situation precarious. It's a sign of wage loss and joblessness. Possibilities of 4.5 per cent plus fiscal deficit by March 31 loom large. The under-5-per-cent-growth will make the deficit even larger," she said.
Stating that the credit rating agencies have repeatedly red flagged fiscal discipline, the Congress spokesperson said, "Letting go of fiscal discipline will make them cut sovereign rating below investment rate. Experts fear hundreds of billions of dollars will flow out of Indian markets. After all shareholders don't allow investments below a certain grade. Higher fiscal deficit will also push inflation higher."
Only thing consistent about this government was the "deteriorating" quality of budgets over six years, she said.
"We sincerely hope the budget will have thought-through proposals and not the half-baked ones, to be rolled back one after the another like the last year. Investors prefer predictable policy environment. Budget needs to outline vision over the medium to long term and not adopt the mask tape approach the government has consistently resorted to," the Congress leader said.