The Congress has called on the government to take urgent measures in the upcoming Union Budget to tackle India’s slowing economic growth, reflected in the first advance estimates for FY25 released on Tuesday.

Reacting to the revised GDP growth projection of 6.4 percent  for 2024-25, down from the Finance Ministry’s earlier estimate of 6.5-7 percent, Congress General Secretary Jairam Ramesh urged steps such as income tax relief for the middle class, income support for the poor, higher MGNREGA wages, increased Minimum Support Price (MSP) for farmers, and a simplified GST regime. He emphasized these measures as crucial to addressing the slowdown and boosting the economy.

“The government can no longer deny the reality of India’s growth slowdown and its various dimensions”, Ramesh said in a statement, adding that India’s consumption story has  “gone into reverse swing” over the last decade and emerged as “ the biggest pain point” for the Indian economy.

Low Government Capex

The Congress criticized the government’s failure to meet its capital expenditure (capex) targets. While the FY25 Budget allocated a record ₹11.11 lakh crore for capex, only ₹5.13 lakh crore had been spent by November—12 percent lower than the corresponding period last year.

The government’s inability to utilize its allocated funds is exacerbating the economic gloom, the party said, urging the government to accelerate public investment and spending to crowd in private investments.

Stagnant Consumption

The Congress highlighted stagnant mass consumption as a primary drag on growth. Private Final Consumption Expenditure (PFCE) growth slowed to 6 percent in Q2 FY25, compared to 7.4 percent in the previous quarter. Moreover, car sales have plunged to a four-year low, and CEOs from India Inc have expressed concerns about a shrinking middle class.

“Stagnant consumption is not just dragging GDP growth rates directly, but it is also the reason why the private sector is disinclined to invest in capacity addition’, the Congress party statement said. 

It added that boosting disposable incomes through direct support and tax relief is critical to reversing the downward trend in consumption.

Sluggish Private Investment

Congress also pointed to a slowdown in private investment, reflected in declining growth in Gross Fixed Capital Formation (GFCF). Government projections show GFCF growth slowing to 6.4 percent  in FY25, down from 9 percent in FY24.

“Without a recovery in private sector investment, medium-term growth prospects will remain bleak,” the party warned.

Call for Structural Reforms

The Congress also emphasized the need for structural reforms to reinvigorate growth. It criticized the GST framework as “comically complex” and called for its drastic simplification to ease compliance for businesses. Additionally, the party advocated for income tax relief to the middle class to boost disposable incomes and revive consumption.

“As the Indian National Congress has consistently advocated, radical action is necessary to dispel these clouds of growth slowdown and investment chill”, Congress party statement added.