When will PM Modi recognise that urban middle class is shrinking: Congress

Mounting unsecured loans have pushed net savings into the red, leaving families with less disposable income, Congress general secretary in-charge communications Jairam Ramesh said

The Congress on Wednesday flagged major economic challenges that have affected consumption patterns and pointed to a "shrinking" urban middle class, asking when will Prime Minister Narendra Modi recognise this reality.

Congress general secretary in-charge communications Jairam Ramesh said that in the last few weeks, multiple leading lights from India Inc have flagged the tremendous slowdown in household private consumption, even in the previously red-hot FMCG sector.

"Now, a new report by the well-regarded Marcellus Investment Managers reveals three major economic challenges that have affected consumption patterns," he said.

Flagging the issue of deteriorating household balance sheets, Ramesh said according to the RBI's own data, net household savings as a percentage of GDP are at their lowest level in nearly 50 years.

Mounting unsecured loans have pushed net savings into the red, leaving families with less disposable income, he said.

He also pointed to a cyclical economic downturn and said India's post-Covid recovery has sputtered out. Corporate earnings in Q2 FY25 recorded the steepest slump in two decades, apart from crises like the 2008 financial crash, Ramesh said.

Pointing to technological disruptions, Ramesh said routine and repetitive jobs that once formed the backbone of middle-class employment are increasingly being replaced by cost-cutting measures like automation and outsourcing.

"The urban middle class has been disproportionately affected and is 'shrinking.' When will the PM recognise this reality?" the Congress leader said.

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