The Congress on Tuesday attacked the Centre over a top U.N. agency projecting a decline in India’s economic growth, saying the government’s contention that the country’s economic problems are imported is a “smoke screen” and it is “singularly responsible” for the woes.
India’s economic growth is expected to decline to 5.7% this year from 8.2% in 2021, the United Nations Conference on Trade and Development (UNCTAD) Trade and Development Report 2022 projected on Monday, citing higher financing cost and weaker public expenditures.
Addressing a press conference at the AICC headquarters in New Delhi, Congress spokesperson Anshul Avijit said the BJP government and its spin doctors keep quoting high-frequency data to “camouflage” the real health of the economy but nobody is fooled.
“Inflation remains high, unemployment is increasing and growth estimates are being revised downwards with each passing day,” he said.
The UNCTAD report on India’s GDP estimate for 2022-23 makes for disturbing news as India’s economic growth is expected to decline to a shocking 5.7% this year from 8.2%, he said.
It is expected to decline to 4.7% in the year 2023-24, he said citing the report.
“The BJP government has repeatedly blamed the global economic crisis for its domestic woes. It says our economic problems are ‘imported’. This is a smoke screen. The government is singularly responsible since all our economic indicators were floundering even before global events laid siege,” Mr. Avijit said.
“One must remember that even the 8.7% growth last financial year was due to the very low base. India’s GDP had contracted to -6.6% in the pandemic year 2020-21, and India was one of the worst performers among all emerging economies,” he claimed.
This cut comes on the back of another downward revision of the GDP by the Reserve Bank of India last week, from 7.2% to 7%, he said.
The RBI governor has warned of extreme volatility and the need to anchor inflation expectations, he pointed out.
“The headline interest rate, the repo rate, was also increased by 50 bps to 5.9% in another desperate bid to control price rice. From May this year, the repo rate has increased by 1.9%,” Mr. Avijit said.
One should not be surprised if there is another cut in GDP estimates after the next Monetary Policy Committee meeting two months from now, and the trend continues, he said.
“The mismatch between a high GDP estimate and the state of the real economy — lack of jobs and output — would be hard to explain,” he said.
Over the past three years, the GDP in India has grown just over 3% and less than 4% since the last quarter before the pandemic, Mr. Avijit said.
At such low levels of growth, India cannot create more jobs or take measures to alleviate poverty, he said.
Similar GDP estimate cuts have been also done by other financial institutions and rating agencies for 2022-23.
“The pessimism regarding future growth is evident —SBI: 6.8% from 7.5%; Fitch 7% from 7.8%; Moody’s 7.7 from 8.8%; Goldman Sachs: 7% from 7.2%,” the Congress spokesperson said.
“The lack of contribution by the informal sector is a primary reason for the decline in GDP. According to an SBI report, the informal sector’s contribution to the GDP in 2017-18 was as much as 52%. This has now plummeted to less than 20%,” he said.”
The weak government data on the informal sector means that speedy counteractive measures cannot be taken, he said.
As many as 5,907 MSMEs have shut shop in the last two years indicating a high level of joblessness and distress, Mr. Avijit claimed.
According to CMIE data, unemployment levels have consistently remained well above 8% for the past two years, he said.
The UNCTAD report said India experienced an expansion of 8.2% in 2021, the strongest among G20 countries. As supply chain disruptions eased, rising domestic demand turned the current account surplus into a deficit and growth decelerated.
On the Bharat Jodo Yatra, Mr. Avijit said it has been in Karnataka for three days and the response has been overwhelming.
"We are moving steadily towards our goal of uniting India, bridging fault lines, and fighting injustice, economic and social. We march on, hail or shine.
“Meanwhile, the Indian economy, one of the primary concerns of the Bharat Jodo Yatra, is confronting one bad news after another,” he said.