Congress on Wednesday (January 8) expressed deep concern over the downward revision of India’s GDP growth estimates for the current fiscal year, urging the government to take bold steps to address the economic slowdown and rekindle investment. AICC General Secretary for Communications Jairam Ramesh called for measures such as income support for the poor, higher wages under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and increased Minimum Support Prices (MSPs) for farmers.
Ramesh also demanded a drastic overhaul of the Goods and Services Tax (GST) regime, which he termed “comically complex”, and income tax relief for the middle class.
According to advance estimates released by the Union government, GDP growth for the 2024-25 fiscal year is projected at 6.4%, a four-year low. This marks a sharp decline from the 8.2% growth recorded in FY24 (2023-24) and is lower than the Reserve Bank of India’s (RBI) revised estimate of 6.6%. The RBI’s projection itself had been downgraded from an earlier estimate of 7.2%.
“In a matter of weeks, the bottom has fallen out of the Indian economy, with the all-important manufacturing sector refusing to expand as it should,” Ramesh said in a statement.
He criticised the Centre for failing to acknowledge the economic slowdown, stating that the reality of India’s stagnating growth and its various dimensions could no longer be denied.
Ramesh further pointed out that India’s consumption story has hit a slump over the past decade, emerging as a major drag on economic growth. He highlighted data from the second quarter of the current fiscal year, which showed a slowdown in Private Final Consumption Expenditure (PFCE) growth to 6%, down from 7.4% in the previous quarter.
“Car sales have plunged to a four-year low, and several CEOs have raised alarms over the ‘shrinking’ middle class. Stagnant consumption is not just directly impacting GDP growth; it’s also discouraging the private sector from investing in capacity addition,” he said in the official statement.
The Congress leader also criticised sluggish private investment, noting that the government’s projection for growth in Gross Fixed Capital Formation (GFCF) was expected to slow to 6.4% this year, compared to 9% last year.
“The private sector’s reluctance to invest in new productive capacity is a troubling trend, and it will have long-term consequences for our medium-term growth,” Ramesh added.
Ramesh questioned the government’s ambitious claims on capital expenditure (capex) investments, which were set at Rs 11.11 lakh crore in the Union Budget for 2024-25. However, he pointed out that as of November, only Rs 5.13 lakh crore had been spent—a figure 12% lower than the same period last year.
“Most estimates suggest that the government will fail to meet its capex spending target before the end of the financial year. This inability to spend allocated funds is contributing to the wider economic gloom,” he said.
Shrinking household savings further compound the problem. Data from the government showed that net financial savings of households fell by Rs 9 lakh crore between 2020-2021 and 2022-2023. Meanwhile, household financial liabilities stood at 6.4% of GDP, the highest in decades.
“The policy failures of the COVID-19 pandemic continue to haunt Indian families,” Ramesh stated.
Ramesh said the grim economic outlook sets a bleak stage for the upcoming Union Budget for FY25-26, which will be presented on February 1. He emphasised that radical measures were essential to dispel the cloud of growth slowdown and revive investments.