Modi govt can no longer deny 'reality' of economic slowdown: Congress on GDP growth estimates

New Delhi: With annual growth estimates predicted to decline to a four-year low of 6.4 per cent in 2024-25, the Congress on Wednesday said the Narendra Modi government can no longer deny the "reality" of economic slowdown and demanded income support for poor, higher MGNREGA wages, increased MSP, income tax relief and a simpler GST regime.

The party said there is stagnancy in mass consumption, sluggishness in private investment, shrinking household savings and government failing to meet the target of capital expenditure and it sets a "gloomy backdrop" to the upcoming Union Budget.

Congress General Secretary (Communications) Jairam Ramesh said that the advance estimates for GDP growth projecting a mere 6.4 per cent growth this year is a "sharp deceleration" compared to the 8.2 per cent growth recorded in 2023-24.

He also said it was even lower than the recent RBI estimate of 6.6 per cent growth, which itself marked a reduction from the earlier projection of 7.2 per cent and in a few short weeks, "the bottom has fallen out of the Indian economy, with the all-important manufacturing sector simply refusing to expand as it should."

"The government can no longer deny the reality of India’s growth slowdown and its various dimensions...Congress has consistently advocated, radical action is necessary to dispel these clouds of growth slowdown and investment chill," Ramesh said in a statement.

The party said that income support for India’s poor, higher MGNREGA wages, and increased MSPs are the need of the hour, as is a "drastic simplification of the comically complex" GST regime and income tax relief for the middle classes.

Finding fault with the government for only spending Rs 5.13 lakh crore as capex investment till November, against a target of Rs 11.11 lakh crore for the fiscal, Ramesh said most estimates suggest that the government will fail to meet the target before the end of the financial year.

"The government’s own incompetence in spending its funds is partly responsible for the wider economic gloom," he said.

The Congress leader also referred to the fall in net financial savings of households by Rs 9 lakh crore and household financial liabilities touching 6.4 per cent of GDP between 2020-2021 and 2022-2023 and claimed, "The abject policy failures of the Covid-19 pandemic continue to haunt India’s families."

He said India’s consumption story in the last 10 years has gone into reverse swing and emerged as the "biggest pain point" for the Indian economy and referred to the data from Q2 that showed that Private Final Consumption Expenditure (PFCE) growth slowed to 6 per cent from 7.4 per cent.

"Car sales have plunged to a four-year low. Several CEOs from India Inc have themselves raised the alarm over the shrinking middle class. Stagnant consumption is not just dragging GDP growth rates directly, it is also the reason why the private sector is disinclined to invest in capacity addition," he said.

The official projection for growth in Gross Fixed Capital Formation (public and private) is that it will slow to 6.4 per cent, down from 9 per cent last year.

"Even this figure covers up the true extent of the private sector’s reluctance to invest in India...It has only become worse since, with new project announcements by the private sector falling by 21 per cent between FY23 and FY24. The private sector’s reluctance to invest in the addition of new productive capacity means that our medium-term growth will continue to suffer," he said.