Congress flays Modi govt's economic policies, wage stagnation, inequality

The Congress on Wednesday lashed out at the Modi government’s economic policies, warning that India was in its "most precarious and difficult" economic situation in many years.

Congress general secretary Jairam Ramesh blamed the Central government for wage stagnation, inflation as well as growing inequality which he said were undermining consumption growth.

"India is in its most precarious and difficult economic situation in many years,” he said in a statement.

Congress warning on Indian economy

“Wage stagnation, inflation, and inequality are not just political issues -- they are structurally corrosive to India's long-term growth prospects."

"These chokepoints will strangulate growth in the years to come if not taken seriously now, in a spirit of humility," the Congress leader warned.

"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 said.

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Ramesh flays Modi years

He said the India growth story in the past three decades was one of consumption growth, of crores of families escaping poverty and entering the middle class and acquiring assets.

But in the last 10 years since Modi became the prime minister, India's consumption story has gone in reverse swing and emerged as the biggest pain point for the Indian economy, he said.

India Inc has now joined the chorus, he said, and quoted a leading CEO as saying that the Indian middle class was actually shrinking.

Static wages, inflation, inequality

Ramesh blamed stagnant wages, high inflation and inequality for the precarious situation.

He quoted even government statistics as showing that workers 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 Congress leader argued.

Rich become richer

On high inflation, Ramesh quoted Dr Viral Acharya, a former deputy governor of the Reserve Bank of India, as saying that the Modi era had seen the emergence of five major conglomerates, including the Adani Group.

The price rise of the last few years was directly attributable to the government's cronyism and patronage of these conglomerates, Ramesh said.

"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.

Two-wheeler sales down

Ramesh said that India's recovery from the Covid-19 pandemic had been highly unequal and K-shaped, with rural India and the poor left behind.

While the sales of two-wheelers in the rural areas, a leading indicator of economic growth, were still lower than in 2018, consumption of high-end products like premium chocolates was growing rapidly, he pointed out.

Private sector not investing

Without adequate growth in consumption to assure them of a market for their products, India's private sector would be not ready to invest in new production, Ramesh said.

Low investment levels drag down the medium and long-term GDP growth rates and were responsible for India's unemployment crisis, he said.