Congress slams govt over 'sluggishness' in private investment, flags ED-CBI-IT 'raid raj'

The Congress on Tuesday attacked the Modi government over "sluggishness" in private corporate investment and said the refusal to invest is motivated by several factors such as slow consumer demand growth due to India's stagnant real wages crisis as well as the ED-CBI-IT "raid raj".

Congress general secretary in-charge communications Jairam Ramesh said that for some time now, his party has been drawing attention to a fundamental problem preventing the economy from achieving higher real GDP growth rates - the sluggishness in private corporate investment.

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"Tax rates have been slashed and the ease of business has allegedly improved substantially. But the intended consequence of these moves - i.e., a boost in private investment - has refused to materialize," Ramesh said on X.

"Now the scholarly Chief Economic Adviser (V Anantha Nageswaran), in the Ministry of Finance has lent his support to our contention by pointing out that post-COVID, India's largest companies saw their corporate profits grow at 30.8% per annum, even as they refused to invest," Ramesh said.

This stubborn refusal to invest is itself motivated by several factors such as slow consumer demand growth due to India's stagnant real wages crisis, he said.

In the absence of consumer demand, there is no incentive for India Inc to invest, Ramesh argued.

He said the refusal to invest is also due to the ED-CBI-IT 'raid raj' which has created an atmosphere of business uncertainty and widespread fear among the investing community.

Ramesh further said the refusal to invest is also due to the increasing control of investment-intensive sectors of the economy that the Modi government has facilitated and encouraged.

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"Modani is the shining example of this cronyism," Ramesh added.

He further argued that there is little incentive for corporates to invest independently and accept the risk that comes alongside it when profits can be "successfully reaped by making a payment to the Modi government's 'Chanda Lo Dhandha Do' business counter".

Ramesh tagged a media report which quoted Nageswaran as criticising the private sector, asking it to reflect why it has been reluctant to invest, which in itself might have contributed to demand uncertainty.

"Post Covid, if you look at BSE 500 or NSE 500 companies, corporate profits grew at 30.8% per annum. But still, our overall capital formation rates from the private sector have been disappointing," Nageswaran was quoted as saying.