BJP govt marching India into middle income trap: Congress ‘Real State of the Economy’ report

He said wages have stagnated for four or five years, “especially rural, agricultural and daily wages”.

“In the meanwhile, inflation is raging. Look at food inflation, education inflation and healthcare inflation. All are in double digits,” said Chidambaram.

Chidambaram said that there is “huge inequality” and no one is denying that the “upper crust of one per cent is extremely wealthy”.

“I concede that even the middle class — the top 20-30 per cent may be better off. But what about the remaining 70 per cent? The population lives on about Rs 100-150 a day. That is 50 per cent of India’s population,” he said, adding that the gap between the rich and poor is increasing and that the government has done nothing to address this.

The report, prepared by the AICC research department headed by Prof Rajeev Gowda, says that GDP growth in the 6% range is insufficient to create jobs for the growing youth population, especially when rapid technological change is disrupting the future of jobs.

“It will keep India stuck in a state of high inequality, where two-thirds of our population remain dependent on free grains from the government, while the Prime Minister’s favoured few accumulate wealth rapidly,” says the report.

It said that the “Modi government appears focused on enriching his coterie of corporate supporters”.

“In 2019, it announced a massive tax cut for corporations, but the private sector has not stepped up investment in return. Common people and small businesses continue to be burdened with punitive taxes on fuel and an extractive Goods and Services Tax Regime,” the report said.

The report also said the “unplanned COVID-19 lockdown, the harshest in the world, brought the economy to a standstill”. “The following years, some unequal recovery ensued but that too is tapering off. In every corner of the country, families, workers, farmers, and businesses are feeling the weight of the government’s failure to deliver on its core commitments and poll promises,” it said.

The report said the first step “toward fixing the economy is to acknowledge what is going wrong”. “Instead, the government has consistently discredited unfavourable data and stayed in a state of denial,” it added.

On the manufacturing sector, the report said “the Modi government’s flagship Make in India initiative, aimed at revitalising India’s manufacturing sector, has been an unmitigated failure”.

On trade and investment, it said that “in the past decade, India’s trade and investment performance has taken a devastating hit. India’s export sector is at its weakest in years, while foreign investment is dwindling. “Private investment has not picked up.”

On welfare policies, the report said the government “has systematically dismantled the welfare state, leaving millions of citizens to fend for themselves”.

“Social safety nets for the most vulnerable have been torn apart, with government schemes slashed, essential services gutted, and inequalities deepened,” it said.

On MNREGA, the report said “this essential programme has faced relentless attacks, as the government has steadily cut its budget allocations, deleted job cards, and introduced reforms that jeopardize the livelihood of rural workers”.

On the farm sector, the report said that despite the workforce’s heavy reliance on agriculture, its contribution to the economy has drastically shrunk, with growth falling from 4.7% in 2022-23 to a mere 1.4% in 2023-24 — the lowest in eight years.