Three Dark Clouds Loom Over Indian Economy: Jairam Ramesh

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Jairam Flags India Inc Avoiding Investment & Deepening Concerns On Economy

By Raisina Correspondent

New Delhi, October 6: Former Union Minister and senior Congress leader Jairam Ramesh said on Sunday that “three dark clouds still loom over the Indian economy”.

“While the monsoon has weakened, new evidence suggests that at least three dark clouds still loom over the Indian economy,” said Ramesh, a Rajya Sabha MP, said in a statement.

The Congress leader stated that the “brief surge in private sector investment during 2022-23 due to the post-COVID recovery has returned to an erratic trajectory”. “New project announcements by the private sector declined by 21% between FY23 and FY24,” added Ramesh.

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He also stated that the decline in the private investment “reflects a lack of investor confidence in India’s consumer markets and an uncertain investment environment created by the government’s inappropriate policymaking and red raj”.

The Congress leader stated that the “companies are using profits to reduce debt burdens rather than grow their businesses”. “We are witnessing an increasing financialisation of the Indian economy. India Inc – perhaps taking cues from the government – is focusing on stock market valuations rather than top-line revenue growth,” added Ramesh.

The Congress leader asserted the grim realities “bode extremely poorly for the medium and long-term future of the Indian economy, as the economy’s growth engine – private sector investment – is weakening”.

He also argued that “even ten years after the launch of the government’s flagship Make in India scheme, India’s manufacturing is stagnant. Manufacturing’s share of GDP is the same as it was ten years ago. As a share of total employment, manufacturing has declined marginally.”

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He stated that India’s share of global merchandise exports has also largely stagnated, and exports as a share of India’s GDP are falling. “Indeed, India’s share of global exports grew very rapidly in the period 2005-15, which largely corresponds to Dr. Manmohan Singh’s tenure as Prime Minister,” added Ramesh.

The Congress leader also stated that the “labour-intensive sectors such as apparel, exports are set to fall from $15 billion in 2013-14 to $14.5 billion in 2023-2024”. “This shrinkage in the manufacturing sector is largely due to the non-biological Prime Minister’s ambiguous trade policy – where it discourages participation in global value chains through high tariffs, while quietly allowing Chinese dumping through massive imports,” added Ramesh.

Besides, Ramesh said that “the Annual Survey of Industries (ASI) for 2022-23 reveals a decline in real wages and productivity for India’s workers. Growth in GVA per worker (a measure of labour productivity) slowed from 6.6% in 2014-15 to 0.6% by 2018-19”.

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He also stated that after “the statistical anomaly of the COVID period, worker productivity has slowed again in FY23”. “This decline in labour productivity has impacted real wage growth, especially amid rising inflation. As long as real wages stagnate, consumption will remain weak. The result – investment will be low, which continues to hamper India’s growth,” added Ramesh.

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