GST compensation to states must be extended by 3 years

New Delhi: Expressing "extreme concern" over the state of the economy, senior Congress leader and former finance minister P Chidambaram called for a recalibration of the economic policies while taking into account global and domestic developments.

Addressing a press conference here on Saturday, he also called for a comprehensive review of fiscal relations between the Centre and the states and demanded that the Goods and Services Tax (GST) compensation to states be extended for a period of three years.

Chidambaram, who is the convener of the group deliberating on economic issues at the Congress' three-day 'Nav Sankalp Chintan Shivir', said the government has completely failed on the economic front and is clueless on how to set things right. "The government is fuelling inflation and unemployment and the fiscal position of states is fragile," he charged, stressing the need to undertake urgent remedial measures.

The Congress leader said the external situation has added to the pressures on the economy. "The government appears clueless on the ways to deal with these developments," he said. Chidambaram dismissed the government's claim that the Ukraine-Russia war has fuelled inflation, saying the rise in oil prices cannot be blamed for the high inflation as a similar situation prevailed even before the war.

"The Ukraine war has added to our problems, but we should have taken pre-emptive action. I don't think simple lame excuses like the Ukraine war can explain why there is high CPI and WPI inflation," he said.