Economic Resolution adopted at the 85th Plenary Session of the Indian National Congress on February 25-26, 2023 at Raipur, Chattisgarh

Introduction

1. The 85th plenary of the Indian National Congress at Raipur (Chattisgarh) from February 24-26, 2023, is an opportunity to reflect and analyze the country’s economic situation. This session of the AICC is being held after the successful completion of the Bharat Jodo Yatra. BJY was a movement to march against the government’s neglect of people’s aspirations. The socio-cultural fabric of India has been torn apart by divisive forces. Our economic growth is on the decline. Price rise and unemployment have turned people’s hopes into despair. Political centralization of power has decimated the federal structure. The Yatra successfully put many critical economic issues on the centre stage, including unemployment and inflation.

2. The Indian National Congress firmly believes that the last 9 years of the Modi Government are replete with failures of governance, terrible mistakes, and wrong priorities. The most mammoth failure is its management of the Economy. Even before the corona-affected years, the economic slide had begun caused by demonetization and a hasty imposition of a flawed goods and services tax (GST) regime. As a result, the Economy, which had grown in FY 2013-14 at 6.9%, came down to 3.7% in FY 2019-20. The pandemic-hit years only accelerated the decline. The last three years are marked by a lack of job creation for youth, destruction of micro, small and medium businesses, consistent high inflation, rising inequality, ever-increasing government debt and falling value of Rupee. In this context, we believe that the time is ripe to consider a re-set of the economic policies.

II. Re-set of Economic Policies

3. A Congress-led government ushered in a new era of liberalization in 1991. The country has reaped enormous benefits in terms of wealth creation, new businesses, and entrepreneurs, a huge middle class, millions of jobs, important interventions in education and healthcare, exports, and lifting 27 crore people out of poverty during the 10 years of the UPA governments. After 30 years, we believe that considering global and domestic developments, a re-set of economic policies is required. A re-set of economic policies must reiterate the advantages of an open, market economy, support wealth creation, reduce inequality between the rich, the middle classes and the poor, and accelerate growth driven by the private and viable public sector enterprises.

Stop turning Demographic Dividend into Demographic Disaster (Jobs)

4. We express our deep distress about the lack of job creation in the Economy. The total working age population in India is around 95 Crore (Population in the age group of 15-64). As per the Centre for Monitoring Indian Economy (CMIE), the labour force participation rate (LFPR) as of November 2022 stood at 39.6%. (LFPR is the ratio of the labour force employed or looking for a job to the population aged 15 years or more). The LFPR was 47.6% in January 2016 and 42.2% in January 2020. With falling LFPR and a consistently high unemployment rate (it was 7.14 percent in January 2023), we are at the risk of not receiving the benefits of our demographic dividend. In 8 out of the last 12 months, the unemployment rate was above 7.5%. We cannot accept jobless growth. We reject the Modi government’s legacy of job-loss growth. We believe that ‘jobs’ should be the main focus of our Economic policy. We must also recognize that industry and services will be mainly driven by the private sector’s investment and risk-taking. We should unambiguously embrace the virtues of aspiration, innovation, creativity, and entrepreneurship.

5. We repeat our commitment to fill all vacancies in government and semi-government bodies, the Armed Forces, the para-military forces and public sector undertakings immediately. MSMEs are the biggest employers employing 12 crore people, and must be given full support to grow and expand. The survey by the Consortium of Indian Associations (CIA) revealed that, during the last five years, 72% of the MSMEs were either stagnant or declined or stopped working, or wound up. As many as 76% of MSMEs said they were not making a profit. We believe that the issue affecting this sector should be resolved as a top priority to generate new jobs.

6. Our growing trade deficit is a cause of concern, particularly with China, which crossed the $100 Billion mark in 2022. We should reassess trade terms with China to reduce imports of electronics and other items high up in the value chain. To encourage domestic manufacturing of these items, we commit to simplifying the procedures for local manufacturing (Particularly of ESDM). This will control the growing trade deficit and generate new employment opportunities. We commit to investing in dedicated skill development programmes for the manufacturing sector and developing infrastructure to encourage domestic manufacturing.

7. An Urban NREGA, similar to MGNREGA, must be introduced to provide a safety net for the urban poor. With massive unemployment and low LFPR, new Labor Codes if implemented are hitting the right of workers adversely. We believe workers have made our country; we should secure their rights and provide justice to them. With the expansion of technology, internet, urbanization and the COVID-19 pandemic, the “Nature of Work” is also changing. According to data available with the NITI Aayog, around 77 Lakh people are employed as gig workers as of June 2022 and their number is likely to treble by 2029-30. We believe in protecting their rights and providing social security measures to them.

8. Generous loans to self-help groups (SHGs) will create thousands of jobs. Grant of risk capital, low-interest loans, and business development support to start-ups will create many thousand jobs. While endorsing these measures to create jobs, we acknowledge that the private sector will be the biggest and best creator of jobs. We must also recognize the crucial role of farmers and promise maximum freedom to them to grow, market, and export their produce.

III. Growing Inequality

9. Growing inequality in India has exposed many truths. In a large and diverse society such as ours, ever-widening income and wealth disparity will turn out to be a social disruptor. According to the Oxfam report, the wealthiest 5 percent in India own more than 60 percent of the country’s total wealth, while the bottom 50 percent own just 3 percent. Conversely, nearly two-thirds (64.3%) of the total GST comes from the bottom 50% of the population and only 3-4% percent from the richest 10% of the country. In their Inequality Report 2022, Chancel, Piketty and others have also estimated that the bottom 50 percent got only 13 percent of the national income. The top 5 to 10 percent (7 to 14 crore people) flaunt their wealth, spend and consume, giving the market the ‘shine’. Extreme poverty among the bottom 10 percent of the population should be considered a grave threat while framing economic policies.

10. It is not only income and wealth inequality; gender inequality is also a cause of concern. Global Gender Gap Index for 2022, released by the World Economic Forum (WEF), ranked India 135 out of 146 countries. We must address the rising inequalities, particularly of income and wealth, gender inequality and regional disparities.

11. The Modi government has cynically ignored the widespread and growing inequalities. Most of its economic policies are targeted to benefit a small section of the people. Among the worst affected are the Farmers, Senior Citizens, Scheduled Castes, Scheduled Tribes, Minorities, and other vulnerable groups. The proof is available in the reduced budget allocations for schemes designed to benefit these sections of people. For example, in the Budget of 2023-24, the budget estimates are lower by Rs. 1,79,364 Crore compared to the revised estimates in 2022-23 under just three heads, namely, MGNREGA, subsidy on food, and subsidy on fertilizer.

12. The world’s largest number of poor people   22.89 Crore, lived in India in 2020, according to the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative (OPHDI) report. We support a programme like NYAY that is designed to facilitate targeted cash transfers. We believe that all economic policies should focus on the direct impact on job creation and improvement in human development indicators of the poor. We must demand more allocations for health and education, a reduction in consumption taxes that affect the poor more, and higher taxes on the wealthiest people.

IV. Persistent high inflation and neglect of the social sector

13. The Congress Party must remain committed to the welfare of the people. The welfare of the people will be enhanced if prices are stable, taxes are fair and reasonable, and there is money in the hands of the people for the consumption of goods and services. The Modi government’s track record has been the exact opposite, starting with the infamous demonetization, crippling taxes on petrol and diesel, high administered prices and persisting CPI inflation at 6.52% for the month ending January 2023. Looking at the details, on a combined basis, the inflation in commonly used essential items was higher than the CPI inflation in most months. For January 2023, cereals and cereal-products inflation was 16.12%, while for eggs, milk, meat, and fish, it hovered between 6-9%; for clothing and footwear, the inflation increased by 9.08%.

14. In the Budget for 2023-24, social sector expenditure as a share of total expenditure is budgeted at 18%. It is the first time that the percentage has fallen below 20% since 2009. Social sector expenditure is budgeted at Rs 8.28 lakh crore in 2023-24, compared to revised estimates of Rs 8.84 lakh crore in 2022-23. Spending in social sectors provides direct relief to the poor and middle income families. We promise to reverse these anti-people and anti-poor policies and measures.

15. In a developing country like ours, the creation of jobs and the creation of wealth must support the expansion of welfare measures. We re-affirm our support for a Universal Basic Income for every low-income family and re-iterate the NYAY scheme that was first promised in the Congress Manifesto 2019. Ensuring healthy lives and promoting well-being at all ages is essential to sustainable development. We promise to provide free health care for all as a Right. For this, appropriate allocation will be made from public funds. We must also commend other welfare measures such as:

a. an education allowance or merit-cum-need vouchers to children who complete 10 and 12 years of school education; b. Provide sufficient funds to address the issues of malnourishment especially among children, and for access to healthcare and medicines to all sections of the people. c. Provide secondary school students from vulnerable communities with free tablets and internet connections to enable e-learning and invest in training teachers to use digital learning tools. d. an allowance to women home-makers who do unremunerated work for many hours of a day; e. larger financial support to Anganwadis and to the Mid-day meal scheme to combat malnutrition among children; f. total waiver of fees for government job applications and job examinations; g. a law to regulate the employment of domestic help and migrant workers; h. social security and insurance to workers in the unorganized sector, including the self-employed;
i. free legal aid to working women and self-employed women; j. agricultural equipment and machinery on hire and post-paid quality seeds to farmers; k. provide institutional finance to enterprises started by SC, ST, Minorities and Women; l. construction of housing stock for the urban poor through priority lending, focus on cluster redevelopment, and ensure better living conditions and modern amenities to residents of low-income neighborhoods. We will incentivize private developers through tax breaks, fast-tracked approvals, increased Floor Space Index, and initiating projects in public-private partnerships.

V. Making Economy and factors of Production Future Ready

16. The Congress Party is committed to ensuring that the Indian Economy and the workforce will be future-ready. In the future, work and economic activity will straddle both the physical and virtual space. Data will be the biggest driver of growth, and we must give high priority to data protection. Future challenges will also include changes in the global economy and advanced technologies such as robotics, machine learning, and artificial intelligence. The future of our energy is Green Energy. There needs to be massive capital expenditure (Green CAPEX) for our green energy transition. We commit to Green CAPEX to effect real change. We will also offer entrepreneurs viability gap funding for innovative green energy solutions and R&D rebates to incentivize the development of indigenous green energy solutions. We believe that we must make the changes necessary in our economic policies to address climate change and the need for mitigation and adaptation.

17. Indian National Congress reaffirms its commitment to consider the expectations of the aspirational generation, including the desire to be self-employed and to found start-ups. The new generation also needs regular jobs in manufacturing, services, agro-industries, sunrise industries, and new technology businesses.

VI. Preventing open loot of public exchequer to fund crony capitalists and establishment of private monopolies

18. With the Adani Maha Mega Scam unfolding in the last few weeks, we cannot allow the government to run away from its responsibility. At the instance of the government, Shri Rahul Gandhi’s questions and large portions of Congress President Shri Mallikarjun Kharge’s speech have been arbitrarily expunged from the Parliamentary record, but the people of India are watching what is happening in Parliament. We want to know why this government is diminishing the value of Parliamentary debates and why the PM is not answering pertinent questions in the Parliament. To prevent open loot of the public exchequer to fund crony capitalists and to regain the investors’ confidence, particularly retail investors, we demand a complete and transparent investigation of this scam by the Joint Parliamentary Committee (JPC).

19. The Indian National Congress and the people of our country are determined to unearth the truth about how one group with doubtful credentials and alleged links with tax haven-operated offshore shell companies has monopolized critical assets of India. Yet, all the government agencies are either missing in action or facilitating the group. We want to know why the Prime Minister facilitated a crony capitalist to become the second richest person in the world and why he is silent on the Hindenburg exposé?

20. We are not against any person rising from a humble place to become the second richest person in the world, but we are certainly against government-facilitated private monopolies. Such monopolies are against the public interest. More particularly, we are against individuals accused of fraud, corruption, and having objectionable relations with tax havens monopolizing our national resources.

21. We reiterate the promise in the Congress Manifesto 2019 that disinvestment will be confined to chronic loss-making PSUs and non-core, non-strategic PSUs. Even while disinvesting, provisions must be built in to protect, as far as possible, reservations for the scheduled castes and scheduled tribes. Besides, care must be taken to ensure that disinvestment does not create a monopoly or a duopoly. Further, we promise that the funds generated through disinvestment will be parked in a Fund dedicated to make investments in improving the quality of education, healthcare, and research and development (R&D).

VII. Improving Centre-State Fiscal Relations

22. Indian National Congress acknowledges the sharp deterioration in Centre-States relations, especially fiscal relations. The Modi government has encroached on the States’ legislative domain. It has also used other powers and levers to centralize decision-making concerning finances and the Economy. The poorly-drafted GST laws and the unfair manner in which the laws have been implemented have added considerably to the strained relations. With the GST, states lost the right to indirect taxes. From July 2022, GST Compensation was halted. A NIPFP study of 2022 showed that the GST Compensation averaged 34% of the states’ GST receipt (SGST) during FY18-FY21. The States’ resources have shrunk, and their fiscal position has never been as fragile as it is now. We cannot leave states in the lurch; we will extend GST compensation to states for 5 more years. During the pandemic fiscal of FY21, the Centre allowed additional borrowing of 1% of GSDP to states (from 3% to 4%) with four “conditions”. In 2022, the Centre reduced the borrowing limit to 3.5% of GSDP. We believe in the financial autonomy of states and will remove all unjustified fiscal restrictions on states.

23. Remedial measures are urgently required to protect and preserve the states’ rights and to enable them to fulfill their obligations under the 73rd and 74th Amendments to the Constitution. The states have been short-changed to nearly Rs. 63,000 Crore, which was budgeted to be transferred to the states in FY 2022-23 but will not be transferred. Indian National Congress recognizes the merit of decentralizing planning, execution, and expenditure to the State, District, and Panchayat levels. We believe the time is ripe for a comprehensive review of Centre-State fiscal relations.

VIII. Ever-expanding Central Debt

24. The present government is burying our future generations in debt. Debt per Indian increased from Rs. 43,124 to Rs. 109,373 in the last 9 years. Debt per Indian has become 2.53 times what it was in 2014 in the 9 years of the Modi Government. The total outstanding debt of the Government of India, which was Rs. 55.87 lakh crore as of March 31, 2014, is estimated to go up to Rs. 155.31 lakh crore by March 31, 2023. As per IMF, for 2022, our debt to GDP was 83%, far above our peers and emerging market and developing economies (EMDEs), which have an average debt of 64.5%. Indian National Congress is concerned about the growing outstanding internal and external debt and other liabilities of the Government of India.

IX. Rupee ends 2022 as worst performing Asian Currency

25. With a fall of 11.3% in a year, the Indian Rupee ended 2022 as the worst-performing Asian Currency. The Rupee finished the year 2022 at 82.72 to the U.S. dollar, down from 74.33 at the end of 2021. Considering several uncertainties heading into 2023, such as tight monetary policy, likely recession in some economies, and an ongoing geopolitical conflict, the Rupee will deprecate further. We are deeply concerned with this falling value of the Rupee as this will add to domestic inflation besides widening the Current Account Deficit (CAD).

X. A New Economic Vision for India

26. The nation has suffered greatly in the 9 years of the Modi government owing to its incompetent management of the Economy. A growing unemployment and inequality, rising inflation, depreciating Rupee, crippling taxation, anti-farmer policies and laws, over-regulation and vindictive actions against businesses, crony capitalism, and a polarized society have been the hallmark of the Modi government. For effective policy-making and planning, we require reliable and timely economic statistics. But in the last 9 years, either critical economic statistics is not published or cannot match realities on the ground. We will reverse this and provide the citizens of our country with reliable and timely economic statistics (Data), as this also affects the electorate’s ability to hold policy-makers to account.

27. The Congress Party will herald a new beginning, just as we did in 1991, involving all sections of the people in nation-building. The time has now come for India to re-evaluate and re-prioritize its economic development roadmap in the backdrop of the twin attack on our economy, namely increasing unemployment and inequality. We need a new economic performance metric that correlates directly to the median Indian’s living standards, economic mobility, and hopes for a better future.

28. We need a holistic set of measures that capture the median Indian’s current and expected prosperity. Our new economic vision and action will be recrafted from the current obsession with capital and move more towards labour. Every decision will be evaluated with what it brings to people in terms of jobs, incomes, healthy living standards, and livelihoods.

29. We believe India needs a new industrial, trade, capital, and labour policy framework to achieve these. Creation of jobs should be the primary benchmark for evaluating all policy options, not mere production. Tax policy should be reoriented towards employees and wages, besides investments and profits. Trade is critical for us as a labour surplus nation. India’s economic vision needs a fundamental shift with all the factors of production as the foundation for development. With this new economic vision, we aim to build a fair, just, and equal economy and bring opportunity and prosperity to all sections of the people.

II. SUBGROUP - ECONOMIC AFFAIRS

Chairman - Shri P. Chidambaram Convenor - Prof. Gourav Vallabh

Members: 1. Shri K. Siddaramaiah 2. Shri Sachin Pilot 3. Shri Su. Thirunavukarasar 4. Shri K. Muraleedharan 5. Shri Bharatsinh Solanki 6. Shri Milind Deora 7. Shri G. Sanjeeva Reddy 8. Ms. Praniti Shinde 9. Shri Praveen Chakravarty 10. Shri Salman Anees Soz 11. Shri Vijay Inder Singla 12. Shri Shailesh Parmar 13. Shri J.D. Seelam 14. Shri Nitin Raut