"Tremendous Slowdown In Household Private Consumption": Jairam Ramesh Flags Economic Slump

Congress General Secretary, In-Charge Communications Jairam Ramesh on Wednesday raised several issues faced by the country’s households, especially the middle class, which has not seen much improvement despite India being one of the developing economies in the world. The Rajya Sabha MP flagged a “tremendous slowdown in household private consumption,” pointing out several factors from the India Inc, the formal sector of the country’s economy, including the government and private sectors in the last few weeks.

The Congress leader noted that even the fast-moving consumer goods (FMCG) sector, which previously saw a quick boom and expansion in the country, has been hit. The FMCG forms factors such as high volume of sales, wide range of products, increased competition, heavy investment, and consumer-oriented growth.

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The Rajya Sabha MP cited a report by Marcellus Investment Managers, a well-noted portfolio service provider, that recently revealed three major economic challenges that have affected consumption patterns in the country: Firstly, the deteriorating household balance sheets. The Congress leader highlighted that the net household savings as a percentage of GDP are at their lowest level in nearly 50 years, according to the Reserve Bank of India’s (RBI) own data. Mounting unsecured loans have pushed net savings into the debt and deficit, leaving families with less disposable income, the Congress leader added.

Secondly, there has been a cyclical economic downturn, the Congress leader points out. “India’s post-COVID recovery has sputtered out. Corporate earnings in Q2 FY25 recorded the steepest slump in two decades,” he underlined, adding that it was apart from crises like the 2008 financial crash.

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Finally, the technological disruptions, as the 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. Jairam Ramesh added that the urban middle class has been shrinking as they have been “disproportionately affected” by the changing economic dynamics. urging the Prime Minister to recognise the reality.

In the last few weeks, we saw multiple leading lights from India Inc flag 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…

— Jairam Ramesh (@Jairam_Ramesh) November 27, 2024