A 95-page report, titled Real State of the Economy 2025, prepared by AICC’s research department headed by Professor Rajeev Gowda, paints a concerning picture of slowing growth, rising unemployment, and deepening inequality.
Published Jan 30, 2025 | 8:53 PM ⚊ Updated Jan 30, 2025 | 9:23 PM
The report comes as a direct challenge to the government's economic narrative ahead of the crucial budget presentation.
The All India Congress Committee (AICC) on Thursday, 30 January, released a scathing assessment of India’s economic performance under the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government, just days before Finance Minister Nirmala Sitharaman is expected to present the Union Budget 2025-26.
The 95-page report, titled Real State of the Economy 2025, prepared by its research department, paints a concerning picture of slowing growth, rising unemployment, and deepening inequality.
The economy will not go into a recession even if there’s no govt in India. We will continue to grow at 4-5% because there are farmers, workers, and small industries that produce food grains and other things and services.
The real question is how much more than 4-5% the govt can… pic.twitter.com/ewvjPFcQbZ
— Congress (@INCIndia) January 30, 2025
The party said the report is based on data from government sources, including the Ministry of Statistics and Programme Implementation, World Bank, and official press releases. The report comes as a direct challenge to the government’s economic narrative ahead of the crucial budget presentation.
The report projects a decline in India’s GDP growth to 6.4 percent in 2024-25, down from 8.2 percent last year. Former Finance Minister P Chidambaram, while releasing the report at the AICC headquarters, said, “The economy is in a slowdown that cannot be denied at all. However much the government may try to do that, the economy has slowed down and it may have fallen up to 2 percent of the previous year’s growth.”
The report further highlights an alarming unemployment crisis, with youth unemployment at 45.4 percent and graduate unemployment at 29.1 percent.
“Our parents of India invest so much in their children’s education. However, today, graduates face unemployment rate of 29 per cent. The more educated you are, the less your chances of getting a job and manufacturing jobs have declined, people are moving back to the farm, where they are under employed and women are badly hit,” said Prof MV Rajeev Gowda, Chairperson, AICC Research Department.
The Congress report particularly criticises the BJP government’s flagship ‘Make in India’ initiative.
Manufacturing growth has averaged just 5.8 percent annually since the party took power, far below the promised 12-14 percent. The sector’s share in GDP remains stagnant at 15.8 percent, missing the 25 percent target set for 2022.
“Manufacturing, the normal pattern of development is the move from farm to factory and then to services. India is experiencing a reversal of this particular pattern,” Prof Gowda said. “New project announcements have fallen by 21 percent in 2023-24.”
Foreign Direct Investment (FDA) has plummeted to 0.8 percent of GDP in 2023, while exports have fallen below 20 percent of GDP, compared to 25.2 percent during the Congress-led United Progressive Alliance (UPA) government’s tenure, the report claims.
Meanwhile, it also highlights what it terms as a “concerning exodus of wealth,” with 21,300 high-net-worth individuals leaving India between 2022-25.
The Union government has prioritised cuts to welfare spending, the report suggests. Healthcare allocations have dropped to 0.27 percent of GDP, far below the National Health Policy target of 2.5 percent. “Chronic malnutrition affects 38 percent of India’s children even today,” Prof Gowda said.
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) programme, a lifeline for rural employment, has seen its budget share fall from 2.15 percent in 2019-20 to 1.33 percent in 2023-24. Nearly four crore job cards were deleted between 2019 and 2024, and the Aadhaar-based payment system has reportedly excluded 50 lakh workers from wage payments.
Agricultural growth has fallen to 1.4 percent in 2023-24, the lowest in eight years. The report notes that 70 percent of farmers earn between ₹11,000 to ₹13,500 per month, with over 55 percent of agricultural households carrying an average debt of ₹91,231.
Inflation continues to squeeze household budgets, according to the report, with the cost of a home-cooked vegetarian meal rising by 10 percent in 2024. “Inflation has eroded the returns on Fixed Deposits (FDs), once considered a reliable investment option for retirees. The rupee has depreciated from ₹58 per dollar in 2014 to over ₹86 per dollar, increasing the costs of imports and stoking further inflation,” the report states.
The report dedicates significant attention to what it terms “crony capitalism.” Public sector banks have written off ₹9.90 lakh crore in the past five years, while the Adani group’s debt has reportedly ballooned to ₹1.1 lakh crore.
“Five big conglomerates are building monopolies in 40 sectors,” the report states, citing former Reserve Bank of India (RBI) Deputy Governor Viral Acharya’s research. “In 2015, when a common man used to spend ₹100 on goods, ₹18 would go as profit to the business owner. In 2021, the owner now gets ₹36 in profits.”
It also examines the recently disclosed Electoral Bonds scheme data, expanding on earlier Opposition allegations about a pattern of corporate donations following regulatory actions.
“When the Supreme Court mandated the disclosure of Electoral Bonds data, a clear pattern of intimidation by tax authorities to seek ‘post-raid’ donations for the BJP was revealed. 41 corporate groups, facing a total of 56 ED/CBI/IT raids, gave ₹1,853 crore to the BJP after they were raided,” the report states.
Focussing on the growing distress among household finances amid rising inflation and stagnant wages, the reports says savings have plummeted to a 47-year low, while consumption growth has hit a 20-year low at 4 percent, indicating deep structural problems in the economy.
“The families of India are in deep distress,” Prof Gowda said, pointing out that household debt has reached an unprecedented 39 percent of GDP.
Real wage growth data reveals a particularly concerning trend: agricultural labourers have seen just 0.8 percent growth, while construction workers face negative wage growth.
Salaried workers have seen their wages decline by 1 percent annually, according to the report. “The poorest 20 percent of households have faced the harshest income losses, with their earnings dropping by more than 50 percent by 2021,” it states.
This economic squeeze comes at a time when food inflation has pushed the cost of a home-cooked vegetarian meal up by 10 percent in 2024 alone.
India’s trade position has weakened significantly, according to the report, with particular concern over growing dependence on Chinese imports.
While exports have fallen from 25.2 percent of GDP under the UPA to below 20 percent currently, imports from China have surged by 83 percent since 2019-20, compared to just 17 percent growth in exports.
“Our import dependence on China has surged by more than 83 per cent since 2019-20,” Prof Gowda noted. The impact is particularly visible in labour-intensive sectors, with garment exports falling from $15 billion in 2013-14 to $14.5 billion in 2023-24.
The report indicates that manufacturing employment has halved between 2016 and 2021, with critical sectors like textiles and electrical equipment suffering negative growth.
The report dedicates a substantial section to what it terms “NDA equals No Data Available,” highlighting systematic delays and suppressions in crucial economic data. The 2021 Census remains delayed years after the COVID-19 pandemic, affecting demographic planning and resource allocation.
“When data reveal unfavourable patterns, the government typically claims that the methodology is flawed,” the report said, citing the example of the 2017-18 Periodic Labour Force Survey, which showed unemployment at a 45-year high but was allegedly withheld until after the 2019 elections.
“They rejected it, they called the data flawed and basically, anything that reeks of bad news, instead of treating those as warning signs, the government just hides the data, rejects the data. Basically, the emperor has no cloths, the economy is in deep distress,” Prof Gowda added.
The report further argues that India’s international credibility has been compromised by the government’s tendency to dismiss unfavourable global indices rather than address their findings.
The report raises alarm about India heading towards a “Middle Income Trap,” with per capita income growing at just 4.52 percent since 2014. More concerning is that India’s per capita income has now fallen below Bangladesh’s, according to the report.
“Ever since demonetisation and [introduction of] GST, we have seen the economy slump and this Modi slump, as we may want to call it, is now the new normal. This has become 6 percent or so as the average growth. At this rate, we are heading straight into what economists’ call the middle-income trap. This means that the kind of opportunity is that we are hoping to create, the demographic dividend, that we are hoping to encash, all those are doomed,” Prof Gowda explained. He added that this would leave India “stagnating, middle income, under productive and uncompetitive globally.”
The report argues that sustained GDP growth of at least 8 percent is necessary for India to avoid this trap and create sufficient jobs for its growing youth population, especially given rapid technological changes disrupting traditional employment patterns.
With the Union Budget just days away, Chidambaram expressed skepticism about potential reforms.
“[The budget] will be Modi 3.0, [but] I actually call it Modi 2.1. I don’t think there is a radical change from Modi 2. Unless they accept the realities of the Indian Economy, they will continue to trudge on the same path which is what I fear, which is what I criticise, unless they change, their approach to growth and development, and they adjust their fiscal and monitory policies accordingly.
“I am afraid it will be more of the same, but I don’t wish more of the same. I hope that they will change, but if they have not changed until yesterday, in their pronouncements there is barely 48 hours for them to change,” he said.
Prof Gowda added, “Our job is to tell the truth about the economy and to layout the facts is the government’s job that’s why they have been elected to actually act on the facts, and find solutions.”
(Edited by Dese Gowda)
