New Delhi: Ahead of the Union Budget, the Congress on Thursday came out with a ‘Real State of the Economy’ report claiming that the Modi government is marching India forward into the middle income trap, which will make the country uncompetitive, underproductive and unequal.
The opposition party also said that India’s GDP growth for 2024-25, as per government data, is expected to be 6.4% but this rate of growth is not a cause for celebration as India needs a sustained GDP growth of 8 per cent if it wants to encash its historic demographic dividend.
AICC Research Department chairperson Professor M V Rajeev Gowda and his team have compiled the report, which was released by senior Congress leader and former finance minister P Chidambaram at the party’s AICC office at 24, Akbar Road here on Thursday.
India has over the last few years consistently failed to achieve targets, the report said, claiming that the Modi government is marching India forward into the middle income trap, “which will make us uncompetitive, underproductive and unequal”.
“GDP growth in the 6% range is insufficient to create jobs for our growing youth population, especially when rapid technological change is 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 titled ‘What happened to growth’.
The Congress said such economic under-performance robs millions of the Constitution’s promise of a more just, prosperous and equal future.
“But the Modi government appears focused on enriching his 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, which comes just a couple of days before Finance Minister Nirmala Sitharaman presents the Union Budget.
Noting that the “unplanned” COVID-19 lockdown brought the economy to a standstill, the party said the following years, some unequal recovery ensued but that too is tapering off.
“In every corner of the country, families, workers, farmers and businesses are feeling the weight of the government’s failure to deliver on its core commitments and poll promises,” it said.
The Congress said the first step toward fixing the economy is to acknowledge what is going wrong.
“Instead, the government has consistently discredited unfavourable data and stayed in a state of denial. This report aims to set record straight by providing a clear picture of various crucial dimensions of the economy. Such constructive criticism is intended to point toward ways to restore India to a future of prosperity, opportunity and inclusive growth,” the report said.
Detailing what it said was different dimensions of “India’s economic malaise”, the report listed unemployment crisis, uninspiring and unequal GDP growth and stagnant incomes, low household consumption and declining savings.
The report also highlighted other issues plaguing the economy under the heads — decline in manufacturing and “devastating hit” to trade and investment, an “eroding welfare state”, “attack on MGNREGA”, agrarian crisis and farm distress, inflation, crony capitalism, the BJP’s “attack on institutions” and suppression of critical data.
In the report, the Congress alleged that the BJP government has unleashed a “relentless assault” on India’s institutions, systematically weakening their autonomy and accountability.
“Once revered for their ability to ensure transparency, governance and public trust, these institutions are now increasingly becoming tools of political expediency, fostering crony capitalism, economic mismanagement and a breakdown of accountability,” the report said.
“The Insolvency and Bankruptcy Board has failed to deliver effective corporate resolutions. High creditor losses, massive haircuts and delays are routine. Influential corporates have gained from distress sales at the expense of creditors,” it claimed.
The report also alleged that the Modi government has undermined the Reserve Bank of India’s independence, including through controversial appointments and the invocation of Section 7, which allowed direct government intervention in the central bank’s operations.
“The Electoral Bonds scheme facilitated opaque political funding mainly to the ruling party. When the Supreme Court mandated the disclosure of Electoral Bonds data, a clear pattern of intimidation by tax authorities to seek ‘post-raid’ donations for the BJP was revealed. 41 corporate groups, facing a total of 56 ED/CBI/IT raids, gave Rs. 1,853 crore to the BJP after they were raided,” it alleged.
The Congress further accused the government of “suppression of key data” or significant delays in the availability of crucial economic data.
“This has the effect of distorting policies and hindering accountability. When data reveal unfavourable patterns, the government typically claims that the methodology is flawed,” it said.
The 2021 Census, essential for demographic planning and resource allocation, has been delayed for years after the COVID-19 pandemic ended, the report said.
While the Economic Survey will be tabled in Parliament on Friday, the Union Budget will be presented by Sitharaman on February 1.
