Congress Warns of Economic Crisis, Citing Wage Stagnation, Inflation, and Inequality
New Delhi: The Indian National Congress party expressed grave concerns on October 30 regarding India’s economic health, labeling the current situation as the “most precarious and difficult” in many years. Congress general secretary Jairam Ramesh emphasized that wage stagnation, inflation, and rising inequality are significantly undermining consumption growth, which is vital for the economy.
Ramesh stated that for the past three decades, India’s growth narrative has largely revolved around rising consumption, facilitating the transition of millions of families from poverty to the middle class. This shift was indicative of a thriving economy that was both rapidly growing and broadly distributing its gains. However, he noted that in the last decade, this trend has reversed, turning consumption into a significant pain point for the economy.
Citing observations from industry leaders, Ramesh pointed out that the middle class in India is reportedly “shrinking,” attributing this downturn to stagnant wages and high inflation. He elaborated on the unequal recovery from the COVID-19 pandemic, highlighting how rural areas and economically disadvantaged populations have been particularly left behind. Sales of two-wheelers, a crucial economic indicator, remain lower than 2018 levels in rural regions, underscoring the challenges faced by the lower-income segments.
Ramesh criticized the current economic structure, claiming that inequality has reached alarming levels, asserting that the current state of affairs is “more unequal than the British Raj in its heyday.” While consumption of luxury goods is on the rise, mass-market consumption is unable to keep pace due to growing disparities.
He warned that without adequate consumption growth, the private sector would be reluctant to invest in new production, leading to further stagnation. He cited the Government’s Economic Survey (2024), which indicated that private sector gross fixed capital formation (GFCF) in key areas has grown a mere 35 percent over the past four years. Furthermore, new project announcements by the private sector have reportedly declined by 21 percent between FY23 and FY24.
Ramesh concluded by emphasizing the urgency of addressing these economic chokepoints, stating, “These issues are not merely political; they are structurally corrosive to India’s long-term growth prospects.” He urged the government to act decisively to mitigate these challenges, stressing that failure to do so could strangulate growth in the years to come. The Congress party has been vocal in its critique of the government’s economic policies, particularly regarding unemployment and inflation.
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