Government Can No Longer Deny The Reality Of India’s Growth Slowdown”: Congress’ Jairam Ramesh

The Indian economy is facing a stark reality of decelerated growth, with GDP projections for the financial year 2024-25 (FY25) estimated at just 6.4%—the slowest in four years. Congress MP and incharge of communications Jairam Ramesh has called out the government, stating, “The government can no longer deny the reality of India’s growth slowdown.” He highlighted multiple areas of concern, including stagnant consumption, weak private investment, low government capital expenditure, and shrinking household savings, all of which are contributing to this worrying trend.

According to the Union Government’s latest advance estimates, GDP growth has sharply declined from 8.2% in FY24 to 6.4% in FY25, even falling short of the Reserve Bank of India’s (RBI) revised estimate of 6.6%. “In a few short weeks, the bottom has fallen out of the Indian economy, with the all-important manufacturing sector simply refusing to expand as it should,” Ramesh remarked.

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Ramesh underscored stagnant mass consumption as a significant challenge, saying, “India’s consumption story has gone into reverse swing over the past decade, emerging as the biggest pain point for the economy.” Private Final Consumption Expenditure (PFCE) growth dropped to 6% in Q2 FY25 from 7.4% in the previous quarter. Car sales, he noted, are at a four-year low, while corporate leaders themselves have warned of a “shrinking middle class.” He argued that stagnant consumption is not only dragging down GDP growth but also discouraging private sector investment in new capacities.

Private investment is another area of concern. “The government’s projection for Gross Fixed Capital Formation growth has slowed to 6.4% this year, down from 9% last year,” Ramesh stated, adding that private sector investment in machinery, equipment, and intellectual property has grown by only 35% over four years—a fact even acknowledged in the government’s Economic Survey 2024. New private project announcements have dropped by 21% from FY23 to FY24, further exacerbating the slowdown. “This reluctance of the private sector to invest means our medium-term growth prospects will continue to suffer,” he cautioned.

The Congress leader also criticised the government for failing to deliver on its promises of increased capital expenditure (capex). Despite allocating ₹11.11 lakh crore for capex in FY25, only ₹5.13 lakh crore has been spent as of November, a 12% decline from last year. “The government’s incompetence in spending its funds is partly responsible for the wider economic gloom,” Ramesh alleged.

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Shrinking household savings have added to the economic strain. Data reveals that net financial savings of households fell by ₹9 lakh crore between 2020-21 and 2022-23, while household financial liabilities have risen to 6.4% of GDP—the highest in decades. Ramesh attributed this to “the abject policy failures during the COVID-19 pandemic, which continue to haunt Indian families.”

Ramesh stressed the need for radical economic measures, urging the government to prioritise income support for the poor, higher MGNREGA wages, increased minimum support prices (MSPs) for farmers, and simplification of the Goods and Services Tax (GST) regime. He also called for income tax relief for the middle class, emphasising that such steps are essential to reverse the economic slowdown.

“This is the gloomy backdrop to the upcoming Union Budget for FY25-26,” Ramesh said. He reiterated the Congress party’s commitment to advocating for policies that address the core issues of stagnant consumption and low investment.

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The GDP slowdown, coupled with muted exports and inflationary pressures, has brought India’s economic challenges to the forefront. As Ramesh noted, “The government’s denial and inaction are costing the nation dearly.”