Addressing an event in Delhi, President Droupadi Murmu said the Indian economy had been demonstrating resilience in the face of geopolitical challenges, and the country's economy was likely to grow tenfold by 2047. "India is the fastest growing major economy and is likely to become the third largest economy soon," Murmu said.
Just a day after President Murmu lauded the Indian economy, Congress general secretary in-charge communications Jairam Ramesh said India was in its "most precarious and difficult" economic situation.
He said that for the past three decades, the India growth story was one of consumption growth – the story of crores of families escaping poverty and entering the middle class, newly able to afford products and acquire assets.
It was the sign of a thriving economy, one that was growing rapidly and distributing its gains widely, the Congress leader said. In the last 10 years, India's consumption story has now gone in reverse swing and emerged as the biggest pain point for the Indian economy. India Inc. has now joined the chorus, with a leading CEO even going so far as to say that the middle class in India is "shrinking", he said.
Ramesh said the reasons for this slowdown are clear – stagnant wages, high inflation, and inequality. Elaborating on these, he said multiple data sources, including the government's own official statistics such as the recently released Annual Survey of Industries (ASI) 2022-2023, have shown clear evidence that workers can buy less today than they could 10 years ago.
"Worryingly, these stagnant wages may have to do with a decline in productivity for India's labourers. As labour productivity falls and real wages stagnate, families will have less additional income to dedicate to consumption," the senior Congress leader argued.
On high inflation, Ramesh said that as Dr Viral Acharya, former deputy governor of the Reserve Bank of India, has noted, the last decade has seen the emergence of five big conglomerates, including the Adani Group, who are building monopolies in 40 sectors, including cement, chemicals, petrol, and construction.
In 2015, when a common man used to purchase Rs 100 worth of goods, he was paying 18 percent to the industrialist owner but today, he is now paying Rs 36 in profits to the same owner, he claimed.
The price rise of the last few years is directly attributable to the government's cronyism and patronage of these conglomerates, Ramesh alleged.
"This relentless increase in the cost of goods and services has eroded the common man's ability to increase consumption, especially given stagnant wages," he added. On equality, Ramesh said that India's recovery from the COVID-19 pandemic has been highly unequal and K-shaped, with rural India and the poor left behind.
The sales of two-wheelers in the rural areas, a leading indicator of economic growth, are still lower than they were in 2018, he said.
"Across geographies, inequality has peaked, with data showing that Narendra Modi's Billionnaire Raj is more unequal than the British Raj in its heyday," Ramesh alleged.
Consumption of high-end products such as premium chocolates is growing rapidly, but because of unequal growth, mass market consumption is unable to keep pace, he pointed out.
Without adequate growth in consumption to assure them of a market for their products, India's private sector will be unwilling to invest in new production, Ramesh said. "As the Government's own Economic Survey (2024) acknowledged, private sector GFCF in machinery and equipment and intellectual property products has grown cumulatively by only 35 percent in the four years to FY23... This is not a healthy mix. It is about to get worse, with new project announcements by the private sector falling by 21 percent between FY23 and FY24," the Congress leader said.
Low investment levels drag down the medium and long-term GDP growth rates and are responsible for the country's unemployment crisis, he claims.
"India is in its most precarious and difficult economic situation in many years. Wage stagnation, inflation, and inequality are not just political issues - they are structurally corrosive to India's long-term growth prospects," Ramesh asserted.
They undermine India's consumption growth and deprive the private sector of its single most important incentive to invest, he adds. "These chokepoints will strangulate growth in the years to come if not taken seriously now, in a spirit of humility," the Congress leader said.
(Except for the headline, this story has not been edited by DNA staff and is published from PTI)
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