Congress flags ‘three dark clouds’ that loom over Indian economy
The Congress party on Sunday took a hit at the economic claims made by Prime Minister Narendra Modi, asserting that the last decade has been marked by “highly detrimental economic trends.”
Congress General Secretary Jairam Ramesh said that there are three significant challenges facing the Indian economy: languishing private sector investment, stagnating manufacturing, and a decline in real wages and productivity.
“The monsoon has receded, but new evidence shows at least three dark clouds still loom over the Indian economy,” Ramesh said in a statement.
He pointed out that private sector investment, which briefly surged in 2022-23 following the COVID-19 recovery, has returned to an “unsteady path.” He noted a 21% decline in new project announcements from FY23 to FY24, reflecting a lack of investor confidence and an uncertain investment climate driven by inconsistent government policies.
Ramesh also criticised companies for prioritising debt reduction over business growth, saying, “We are witnessing a growing financialisation of the Indian economy, with India Inc. focusing on stock market valuations rather than top-line revenue growth.” He warned that this trend bodes poorly for the future, as private sector investment remains sluggish.
The Congress leader also addressed the stagnation of manufacturing a decade after the government’s flagship “Make in India” initiative was launched. He remarked that manufacturing’s share of GDP has remained unchanged and that India’s participation in global merchandise exports has stagnated.
In labour-intensive sectors, Ramesh noted a decline in exports, citing a drop from $15 billion in 2013-14 to $14.5 billion in 2023-24 for garments. He attributed this decline to the government’s trade policy, which he claimed disincentivises participation in global value chains while allowing excessive imports from China.
Ramesh also said that the latest Annual Survey of Industries indicated a decrease in real wages and productivity for labourers. Ramesh said that growth in gross value added (GVA) per worker slowed from 6.6% in 2014-15 to just 0.6% by 2018-19. He warned that stagnating real wages, coupled with rising inflation, will weaken consumption and hinder investment, further restraining economic growth.
“The last ten years have seen other detrimental economic trends, including rising oligopolisation, mass unemployment, and high inflation,” Ramesh said.
He urged that the “bombastic claims” regarding the economy should not obscure the choke points that could strangle future growth if not addressed seriously.