Average Indians can buy less than they could 10 years ago: Congress

Congress leader Jairam Ramesh. File | Photo credit: ANI

The Congress on Sunday (Nov 10, 2024) claimed that the average Indian can buy less today than they could a decade ago and said the reason for the slowdown in India’s consumption is the result of persistent income stagnation.

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In a statement, Congress General Secretary (Communications) Jairam Ramesh said, “Assuming an average household size of 4-4, the per capita income in rural areas is an estimate of ₹ 2,886 per month. Hence, the vast majority of Indians have very little money for discretionary spending beyond basic necessities.”

“This slowdown in consumption destroys our medium- and long-term economic potential, whatever the quarterly GDP numbers might suggest,” he added.

Mr. Ramesh said the private sector will be reluctant to invest in new production without sufficient growth in consumption.

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The senior Congress leader urged the government to accept what the Congress has proposed — raising MGNREGA wages to a minimum of ₹ 400 a day, guaranteeing MSP and a loan waiver for farmers and a monthly income support scheme for women — to jumpstart income growth in rural India.

He said that with each passing day, the tragedy of India’s dying consumption story becomes more apparent.

Last week, several CEOs from India Inc. alarm over the ‘shrinking’ middle class, and now new data from NABARD’s All India Rural Financial Inclusion Survey (NAFIS) 2021-22 adds to the evidence that India’s demand crisis is a result of persistent income stagnation, he said in a statement.

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“As the government’s own Economic Survey (2024) acknowledged, private sector gross investment in machinery, equipment and intellectual property products has grown cumulatively by only 35% in the four years to FY23. It is not a healthy mix,” he said.

‘Twin engine of private investment, mass consumption ‘derailed’ under Modi govt.’

Taking another dig at the “non-biological PM”, Ramesh claimed that the “twin engine” of private investment and mass consumption that powered the Congress-led UPA’s decade of sustained GDP growth has been derailed in the last decade by Modi- the government.

Citing Labor Bureau wage rate index data, Mr Ramesh said real wages for workers stagnated between 2014 and 2023 and actually fell between 2019 and 2024.

He further cited the Ministry of Agriculture’s agricultural statistical data to establish that under Dr. Manmohan Singh grew the real wages of agricultural workers by 6.8 percent every year, he said.

“Under Mr Modi, real wages for agricultural workers fell by -1.3% every year,” he said.

Also read | Inequality, wage stagnation, inflation ‘structurally corrosive’ to long-term growth prospects: Jairam Ramesh

Citing periodic data from the Labor Force Survey series, he said average real earnings have stagnated over time between 2017 and 2022 across all employment types – wage earners, casual workers and the self-employed.

He also cited Center for Labor Research and Action data to claim that real wages for brick kiln workers have stagnated or declined between 2014 and 2022. He added that brick kilns involve intensive labor and are a low-wage job of last resort for India’s poorest.

“This slowdown in consumption is destroying our medium- and long-term economic potential, whatever the quarterly GDP numbers might suggest,” he argued.

Without sufficient growth in consumption to secure them a market for their products, India’s private sector will be reluctant to invest in new production, argued Mr. Ramesh.

The Congress had last week alleged that deliberate destruction of MSMEs through “negligent policy-making, a botched demonetisation, a bungled GST rollout and the unplanned COVID-19 lockdown” is partly responsible for the shift away from labour-intensive growth.

The Congress has repeatedly attacked the Center over its handling of the economy, raising concerns over “rising” unemployment and price hikes.

(With inputs from PTI)