 "NDA's policies marching India forward into the middle income trap: Congress")
On the eve of the tabling of the Economic Survey for 2024-25 in Parliament, the Congress on Thursday released a report titled “Real State of the Economy”, which blamed the National Democratic Alliance (NDA) government’s economic policies for “marching India forward into the middle income trap, which will make India ‘uncompetitive, underproductive and unequal’”.
Congress leader P Chidambaram released the report, prepared by the party’s Research Department, which former Rajya Sabha M V Rajeev Gowda heads.
The report argued a gross domestic product (GDP) growth rate in the 6 per cent range was insufficient to create jobs for India’s growing youth population, especially when rapid technological change was disrupting the future of jobs.
“It will keep India stuck in a state of high inequality, where two-thirds of our population remain dependent on free grains from the government, while the Prime Minister’s favoured few accumulate wealth rapidly,” said the report.
Gowda pointed to former Reserve Bank of India deputy governor Viral Acharya’s report, which shows five corporate groups are monopolising 40 major sectors of the economy.
“So, what you are seeing is concentration rather than dispersion and competition within the economy,” he said, and contended that the trend had deterred other groups from investing in these sectors.
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The Congress’ report said India’s GDP growth for 2024-25, according to the government data, is expected to be 6.4 per cent but this rate was not cause for celebration because India needed a sustained growth rate of 8 per cent if it wanted to cash in on its historic demographic dividend.
It said the government appeared focused on enriching its coterie of corporate supporters.
“In 2019, it announced a massive tax cut for corporations, but the private sector has not stepped up investment in return. Common people and small businesses continue to be burdened with punitive taxes on fuel and an extractive Goods and Services Tax regime,” said the report.
Chidambaram said India was facing an economic slowdown. To a question whether India might face recession, he said the economy would not go into a recession even if there was no government in India. “We will continue to grow at 4-5 per cent because there are farmers, workers and small industries that produce food grains and other services. The real question is how much more than 4-5 per cent the government can grow the economy,” he said.
The former Union finance minister said the government’s policies added 1.5-2 per cent to the inherent growth rate, but that was not sufficient.
“We are indeed the fastest-growing economy in the world, but please remember this -- growing at 2.7 per cent last year the US added $787 billion to its GDP in that one year. China grew last year at 4.91 per cent, and it added $895 billion to its GDP. We are growing at a faster rate but we add only $256 billion to our GDP. So, we need to see the addition to the GDP and not compare the growth rates,” he said.
The report said: “The government has consistently discredited unfavourable data and stayed in a state of denial. This report aims to set the record straight by providing a clear picture of various crucial dimensions of the economy.”