New Delhi: Flagging the issue of household indebtedness, the Congress on Thursday said the root cause of such a “deep-seated” malaise was the stagnation in real wages and claimed the government had failed to acknowledge the “crisis”.
Congress president Mallikarjun Kharge claimed a hundred crore Indians did not have any extra income to spend and alleged that Prime Minister Narendra Modi’s version of Viksit Bharat emptied ordinary Indians’ pockets and filled the coffers of select billionaires.
India is staring at a global tariff war and trade barriers and the Union budget announcements have turned out to be a “damp squib”, he further said.
Congress general secretary in-charge communications Jairam Ramesh cited the recently-released Indus Valley Annual Report 2025, an examination of India’s economic landscape and start-up ecosystem by VC firm Blume Ventures, to attack the government.
The report offers a granular look into the Indian economy, he said and asserted that its most worrying implications were for India’s household finances.
Ramesh said India’s recovery from COVID-19 was based on consumption growth that was driven by loans.
Consumer loans in the post-Covid years were about 18 per cent of the Private Final Consumption Expenditure, he said.
In this time, personal loans replaced industry loans as the biggest segment of non-food borrowing, Ramesh said.
“This was a reflection of the slowing private investment levels. Much of this indebtedness was due to the rise in small ticket personal loans from non-banking financial companies — they comprise 82 per cent of the new personal loans originated in 2024,” he said citing the report.
Credit growth has now created a household indebtedness crisis instead of continuing to fuel consumption, Ramesh said.
Household debt to GDP has hit an all-time high of nearly 43 per cent, he claimed.
“As a flipside to the household indebtedness, households are saving less — especially financially. Household share of savings dropped from 84 per cent in FY 2000 to 61 per cent in FY 2023, reflecting an increase in uninvested corporate profits,” he said.
Without adequate savings to finance investments, combined with sluggish foreign direct investment, India is undergoing a massive slowdown in private investment, Ramesh said.
“The root cause of this deep-seated malaise is the stagnation in real wages, both in the salaried sector and in the informal rural sector. Without increasing labour productivity and higher wages, any growth in consumption will have to be based on unsustainable credit booms,” the Congress leader said.
Ten years after this crisis first surfaced, and five years after COVID-19 hit, the government continues to fail to acknowledge this crisis, Ramesh alleged.
Citing the same report, Congress general secretary Priyanka Gandhi Vadra said around 100 crore of the country’s 140 crore people did not have enough money to buy anything other than the most essential expenses of life.
“Today, inequality in the country is at its peak … 57.7 per cent of the total national income is owned by the richest 10 per cent people and the poorest 50 per cent population has a share of just 15 per cent. The savings of the middle class are at a 50-year low and the income of employed people has remained stagnant for 10 years. Only a few rich people are becoming richer,” she said in a post in Hindi.
The economic injustice prevalent during BJP rule has become a curse for the country’s poor and the middle class, Priyanka Gandhi said.
