Congress accuses PM Modi of destroying MSMEs and informal sector, gives suggestions

Ramesh further dubbed demonetisation, GST, and Covid-19 lockdown as the three main "shocks" for the "economic catastrophe".

BySouth First Desk

Published Jul 10, 2024 | 4:12 PM Updated Jul 10, 2024 | 4:12 PM

Congress general secretary in-charge communications Jairam Ramesh.

Congress general secretary and Rajya Sabha MP Jairam Ramesh launched an attack on Prime Minister Narendra Modi for “systematic destruction of India’s informal sector and MSMEs”

Citing a report by credit ratings firm India Ratings, Ramesh said, Modi’s policymaking has cost India ₹1.3 lakh crore in GDP and 1.6 crore jobs.

Ramesh further dubbed demonetisation, GST, and Covid-19 lockdown as the three main “shocks” for the “economic catastrophe”.

In a statement dated 10 July, the Congress MP noted that the surprise demonetisation announcement, made on 8 November, 2016 had halted all economic activity for the following months without bringing any clear economic and social benefits.

Jairam Ramesh also recalled Manmohan Singh’s comments on the demonetisation, where he took to the parliament to call the move, “Organised loot and legalised plunder.”

Further speaking the GST rolled out in July 2017, Ramesh called it a “convoluted tax structure, with high compliance burden, and punitive enforcement.”

Coming to the nationwide COVID-19 lockdown on 24 March, 2020, Ramesh called out the decisions, as one without prior notice, adequate preparation, or an economic program to protect the informal sector.

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Loss of jobs and GDP

Citing the India Ratings report, Jairam Ramesh noted a few numbers related to the MSME and informal sector of India.

Ramesh noted that the unorganised sector contributes more than 44 percent to India’s Gross Value Added (GVA).

He further added, “the unorganised sector grew at 7.4 percent Compound Annual Growth Rate (CAGR) between FY11 and FY16, but has suffered an average yearly contraction of 0.2 percent since then By FY23, GVA by unincorporated businesses was 1.6 percent below FY16 levels. This recession in the unorganised sector cost India 4.3 percent of its GDP or ₹1.3 lakh crores.”

Calling out the lack of employment options, Ramesh said, “63 lakh informal enterprises shut down due to these three shocks, leading to the loss of 1.6 crore jobs. At a time when record number of youth were entering the labour markets, the Modi Government was destroying jobs.”

Further criticising the Modi government, he said, “For all the hype and bluster of Make in India, manufacturing jobs reduced from 3.6 crore in FY16 to 3.06 crore in FY23.”

“Manufacturing is India’s ticket to solving unemployment and reaching a sustainable middle-income status. The non-biological PM oversaw the destruction of India’s manufacturing.”

Congress’ suggestions

Recalling that the Congress has, after holding consultations with stakeholders, put out a five-point program to revive the informal sector amid the Covid-19 pandemic, Ramesh listed three suggestions:

  • Establish GST 2.0, with a single, moderate rate and relief for small taxpayers like MSMEs.
  • Lessen the burden of tax on MSMEs owned by individuals and partnership firms.
  • Ensure a level-playing field and oppose the rampant monopolisation and oligopolisation that has crowded out MSMEs.

He ended the statement by saying that the “140 crore Indians are now paying the economic consequences of the non-biological Prime Minister’s cronyism, arbitrary policymaking, and refusal to engage constructively on issues.”

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(Edited by Sumavarsha Kandula)

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