Congress blames neglect of MSMEs for shift from labour intensive growth

Hitting out at the Centre, the Congress on Tuesday alleged that deliberate destruction of MSMEs through "neglectful policy-making, a blundering demonetisation, a botched-up GST rollout, and the unplanned Covid-19 lockdown" is partly responsible for the shift away from labour-intensive growth.

Congress General Secretary (Communications) Jairam Ramesh cited an article in a newspaper highlighting the paradox of ostensibly higher GDP numbers and their failure to create jobs or increase rural wages (adjusted for the increase in prices).

The latest Annual Survey of Industries (ASI) for 2022-2023 indicates that some part of the decline in real wages can be attributed to a decline in labour productivity, Ramesh said.

The growth in GVA per worker (a measure of labour productivity) slowed from 6.6 per cent in 2014-15 to 0.6 per cent by 2018-19, the Congress leader said.

After Covid-era statistical irregularity, worker productivity contracted again in FY23, he added.

The trend away from labour-intensive growth that the author has identified is not an accident, but a direct result of government policy, Ramesh claimed.

"The deliberate destruction of MSMEs -- through neglectful policymaking, a blundering demonetisation, a botched-up GST rollout, and the unplanned Covid-19 lockdown -- is partly responsible for this shift away from labour-intensive growth," he said.

"The other part of this trend is of course explained by the government's deliberate cultivation of oligopolies in the key sectors, which has killed competition, raised prices, and incentivised capital-intensive growth," Ramesh said.

Claiming that India is in its "most precarious and difficult" economic situation in many years, the Congress last week said that wage stagnation, inflation and inequality are undermining the consumption growth in the country.

These chokepoints will strangulate growth in the years to come if not taken seriously now, Ramesh said last week.

The Congress has been repeatedly attacking the Centre over its handling of the economy, raising concerns over "increasing" unemployment and price rise.