The Congress on Sunday claimed that India was facing a "demand crisis" due to sustained income stagnation and said the 'double engine' of private investment and mass consumption that powered the UPA's decade of sustained GDP growth has been "derailed" in the last ten years of the Modi government.

Congress general secretary in-charge communications Jairam Ramesh urged the government to accept what the Congress has been proposing - raising MGNREGA wages to a minimum of Rs. 400 per day, guaranteeing MSP and a loan waiver for farmers, and a monthly income support scheme for women - to kickstart income growth in rural India.

He said that with each passing day, the tragedy of India's dying consumption story becomes more evident.

Last week, several CEOs from India Inc raised the alarm over the 'shrinking' middle class and now, new data from NABARD's All India Rural Financial Inclusion Survey (NAFIS) 2021-22 adds to the evidence that India's demand crisis is a result of sustained income stagnation, he said in a statement.

Citing key takeaways from the survey data, Ramesh said the average monthly household income for Indians is Rs 12,698 to Rs 13,661 for agricultural households and Rs 11,438 in non-agricultural households.

"Assuming an average household size of 4.4, the per capita income in rural areas is an estimate Rs. 2,886 per month - less than Rs 100 a day. The vast majority of Indians therefore have very little money for discretionary consumption beyond that of basic necessities," Ramesh said, citing the data.

"This is hardly the exception - nearly every piece of evidence points to this same damning conclusion: that the average Indian can buy less today than they could 10 years ago. This is the ultimate root cause for India's consumption slowdown," he claimed.

Citing Labour Bureau's Wage Rate Index data, Ramesh said real wages for labourers stagnated between 2014 and 2023, and in fact declined between 2019 and 2024.

Further, he cited the Ministry of Agriculture's Agricultural Statistics data to state that under Dr Manmohan Singh, real wages for agricultural labourers grew at 6.8 per cent each year, he said.

"Under Mr. Modi, real wages for agricultural labourers declined by -1.3 per cent each year," Ramesh said.

Citing periodic Labour Force Survey Series data, Ramesh said the average real earnings over time have stagnated between 2017 and 2022 across all employment types - salaried workers, casual workers, and self-employed workers.

He also cited Centre for Labour Research and Action data to claim that real wages of brick kiln workers have stagnated or declined between 2014 and 2022.

He added that brick kilns involve intensive labour and are a low-paying work of last resort for India's poorest.

"This slowdown in consumption is destroying our medium-term and long-term economic potential, whatever the quarterly GDP numbers may suggest," he asserted.

Without adequate growth in consumption to assure them of a market for their products, India's private sector will be unwilling to invest in new production, Ramesh argued.

"As the Government's own Economic Survey (2024) acknowledged, 'private sector GFCF (gross fixed capital formation) in machinery and equipment and intellectual property products has grown cumulatively by only 35 per cent in the four years to FY23 - This is not a healthy mix. It is about to get worse, with new project announcements by the private sector falling by 21 per cent between FY23 and FY24," he said.

Very recently, the Confederation of Indian Industry, the premier industry association, has suggested that the Government boost MGNREGA wages by 40 per cent, raise payments under PM-KISAN by one-third, and issue 'consumption vouchers' that can be used by lower-income citizens to purchase specific goods and services over a six-to-eight-month period, Ramesh said.

This is very much in line with the policies the Indian National Congress had advocated in its Nyay Patra for the 2024 Lok Sabha Elections - raising MGNREGA wages to a minimum of Rs. 400 per day, guaranteeing MSP and a loan waiver for farmers, and a monthly income support scheme for women, he said The Government must accept this proposal to kickstart income growth in rural India after a decade of stagnation, Ramesh said.

"The 'double engine' private investment and mass consumption that powered the Congress-led UPA's decade of sustained GDP growth has been derailed in the last ten years of the non-biological PM. It is time to set it back on track," he said.

The Congress last week had alleged that deliberate destruction of MSMEs through "neglectful policy-making, a blundering demonetisation, a botched-up GST rollout, and the unplanned COVID-19 lockdown" is partly responsible for the shift away from labour-intensive growth.

The Congress has been repeatedly attacking the Centre over its handling of the economy, raising concerns over "increasing" unemployment and price rise.

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