The Congress party on Wednesday highlighted a series of economic challenges affecting India’s middle class, specifically pointing out the shrinking urban middle class and asking when Prime Minister Narendra Modi would recognise this emerging reality. The party also flagged concerns regarding deteriorating consumption patterns and economic slowdowns, drawing attention to the adverse effects these issues are having on the nation’s households.
Congress general secretary in-charge communications, Jairam Ramesh, voiced his concerns, stating that in recent weeks, several key figures from India’s business community had expressed alarm over the steep slowdown in household private consumption, including in sectors that were once considered robust, such as the fast-moving consumer goods (FMCG) sector. According to Ramesh, a new report by the well-regarded Marcellus Investment Managers identifies three major economic challenges that are directly influencing consumer behaviour.
One of the key issues raised by Ramesh is the deterioration of household balance sheets. He pointed out that the Reserve Bank of India (RBI) has reported that net household savings as a percentage of the nation’s GDP are at their lowest levels in nearly 50 years. Ramesh explained that mounting unsecured loans had pushed net savings into negative territory, leaving families with less disposable income to spend on goods and services, further exacerbating the economic slowdown.
Ramesh also referred to a cyclical economic downturn, stating that India’s post-Covid recovery has faltered. He noted that corporate earnings in the second quarter of fiscal year 2025 had seen the sharpest decline in two decades, with the only comparable periods being the global financial crisis of 2008. This trend, he argued, underscores the broader economic stagnation and growing challenges faced by the middle class.
In addition to the financial troubles faced by families, Ramesh pointed to technological disruptions as another factor eroding the stability of the middle class. Many routine and repetitive jobs that once formed the backbone of middle-class employment are now being replaced by cost-cutting measures such as automation and outsourcing. These technological shifts, while benefiting corporate bottom lines, have disproportionately affected the urban middle class, leaving many workers without stable job opportunities.
“The urban middle class has been disproportionately affected and is ‘shrinking,'” Ramesh stated. “When will the Prime Minister recognise this reality?” he added, criticising Modi for failing to address the growing concerns facing India’s middle class, which had traditionally been seen as the driving force behind the nation’s consumption-led growth.
Ramesh also highlighted the increasing challenges posed by rising unemployment and escalating prices, which have become major issues for households across India. The Congress has long attacked the government over what it views as its failure to manage the economy effectively, with Ramesh accusing the Modi administration of neglecting the needs of ordinary people in favour of corporate interests.
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The Congress party has consistently raised alarms about the growing economic disparity under Modi’s leadership, arguing that the wealth gap between the rich and poor is widening, and that government policies are failing to create enough jobs or provide adequate support for the middle class. The issues of unemployment, inflation, and stagnant wages have become key talking points for the opposition, who believe that the government’s economic policies have failed to deliver tangible benefits for the majority of Indians.
As India grapples with these mounting challenges, the debate over the state of the economy is likely to intensify in the coming months, particularly as the country heads into state and national elections. The Congress is positioning itself as a vocal critic of the current administration’s economic handling, hoping to capitalise on growing discontent within the middle class and the wider electorate.
The BJP, on the other hand, continues to defend its economic record, citing India’s overall growth and its handling of the Covid-19 crisis as key achievements. However, as consumer confidence falters and economic pressures mount, the Congress party’s critique of the government is expected to resonate with many who feel left behind by India’s recent economic trajectory. The growing unease within the urban middle class is a challenge that the Modi government will likely have to address in the coming months, as both political parties gear up for the 2024 general elections.
