“Today we have crony capitalism. That cannot be denied. I can give examples of crony capitalism, you know it as well as I do… As long as you have crony capitalism those who are not your cronies will hesitate to start business,” said Chidambaram.
The government has to create a climate where everybody must believe that he or she would be treated equally and will have an equal opportunity, he said while addressing the 25th Wharton India Economic Forum.
“It’s not enough to have five business houses expanding, we need 500 business houses to expand and we need new businesses and entrepreneurs like Infosys, Wipro and the guy who started Flipkart. We need new but the new people are afraid that unless they play the game which the government wants them to play, they will be squeezed out,” he said.
Speaking about the state of economy, Chidambaram said there are a number of negatives, and a number of paradoxes.
“We are still in a negative growth mode although rate has declined. Yet the stock market is booming. There is a huge inflows of foreign capital. We are accumulating foreign exchange…,” the Congress leader said.
On the ground, he said, the demand is low with bottom one-third population has no money to spend while middle one-third only spends on essentials and the top one-third saves rather than investing.
He further said that investment is very low even though there are claims of investments.
Citing the farmers protest against the farm laws at Delhi borders, he said there are huge social and economic disrupting factors in the country.
Terming unemployment situation quite explosive, Chidambaram said it is proved by the rise in the workforce and the rise in rate of unemployment.
Situation in the MSME sector is quite terrible, he said adding the government should consider giving loans to micro and small businesses at concessional rates so that they survive.
It is mix of negatives and paradoxes with a few positives, but “negatives and paradoxes overweigh the positives”, he added.
Giving his advice to the government for the revival of economy, the former finance minister said there is an immediate set of things that has to be done, including significant cash transfers must be made to bottom one-third of the population.
Besides, he said, indirect taxes especially GST must be cut immediately for at least six months and remove all import and export restriction except for emergency.
He also advocated utilisation of surplus cash of PSUs for spurring investment or deploying it for recapitalisation of public sector banks.
Pointing out that India now is an over-regulated country, Chidambaram said there is a need for a regulatory overhaul.