New Delhi. Congress on Sunday claimed that India is facing a demand crisis due to persistent income stagnation. The main opposition party said the twin engines of private investment and mass consumption that consistently drove GDP growth during the UPA government have derailed in the last ten years of the Modi government.
Congress general secretary and communications in-charge Jairam Ramesh asked the government to accept Congress’ proposals, including raising MNREGA wages to a minimum of Rs 400 per day, guaranteeing MSP and loan waiver for farmers, to accelerate income growth in rural India. Dena and monthly income support scheme for women. He said that the tragedy of India’s declining consumption is becoming more evident as time passes.
He said in a statement that last week, many CEOs of Indian business had expressed concern over the shrinking middle class and now, new data from NABARD’s All India Rural Financial Inclusion Survey (NAFIS) 2021-22 also confirms this. That India’s demand crisis is due to persistent income stagnation.
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Citing survey data, Ramesh said the average monthly household income was Rs 12,698 to Rs 13,661 for agricultural households and Rs 11,438 for non-agricultural households. He further said that the estimated per capita income in rural areas is Rs 2,886 per month, which is less than Rs 100 per day. So most Indians have little money for discretionary consumption beyond basic needs. He claimed, almost every evidence points to the same conclusion that the average Indian can buy less today than 10 years ago. This is the root cause of slowdown in India’s consumption.
Citing Labor Bureau wage rate index data, Ramesh said real wages of workers remained stagnant between 2014 and 2023 and actually declined between 2019 to 2024. Citing agricultural statistics data of the Agriculture Ministry, he said that during the tenure of Manmohan Singh, the real wages of agricultural laborers increased by 6.8 percent every year.
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Ramesh said, during Modi’s tenure, the real wages of agricultural laborers decreased by -1.3 percent every year. Citing data from the Periodic Labor Force Survey series, Ramesh said average real incomes have remained stable over time between 2017 and 2022. Citing data from the Center for Labor Research and Action, he claimed that real wages for brick kiln workers remained stagnant or declined between 2014 and 2022.
He claimed that this slowdown in consumption is destroying our medium-term and long-term economic potential. Ramesh argued that without a substantial increase in consumption, India’s private sector would be unwilling to invest in new production.
