STATEMENT ISSUED BY SHRI JAIRAM RAMESH, MP, GENERAL
SECRETARY (COMMUNICATIONS), AICC
17th July, 2024
The single most important statistic that explains India’s inability to grow
faster since 2014 is the sluggish investment rate.
* India has been locked into a cycle of low investment since 2014, due to a combination
of erratic policy, rampant cronyism, and the ED/IT/CBI Raid Raj
* Low investment levels drags down the medium and long-term GDP growth rates, which
in turn drags down wages and consumption growth
* The biggest component of investment – private domestic investment – has been in the
doldrums since 2014. It was solidly in the 25-30% of GDP range during Dr. Manmohan
Singh’s tenure. Under the self-declared divinity, it has been squarely in the 20-25% of
GDP range
* Gross FDI as % of GDP has also more or less stayed constant since 2014. This is,
however, only part of the story. Since at least 2016, multi-national companies across the
world have been looking to divest from China and invest in other developing countries.
India, with a large and growing labour pool, was at the right place at the right time – but
this generational opportunity to garner FDI and become a manufacturing and exportoriented economy has been squandered. Countries like Bangladesh and Vietnam have
walked away with the benefits.
Sops like corporate tax cuts and PLIs can’t compensate for a freer society, polity, and
economy – one that is free from demonetization-like masterstrokes, cronyism, and Raid
Raj. What India needs is not marginal policy tinkering, but a new, liberalised approach to
political economy.
1, due to a combination
of erratic policy, rampant cronyism, and the ED/IT/CBI Raid Raj
* Low investment levels drags down the medium and long-term GDP growth rates, which
in turn drags down wages and consumption growth
* The biggest component of investment – private domestic investment – has been in the
doldrums since 2014. It was solidly in the 25-30% of GDP range during Dr. Manmohan
Singh’s tenure. Under the self-declared divinity, it has been squarely in the 20-25% of
GDP range
* Gross FDI as % of GDP has also more or less stayed constant since 2014. This is,
however, only part of the story. Since at least 2016, multi-national companies across the
world have been looking to divest from China and invest in other developing countries.
India, with a large and growing labour pool, was at the right place at the right time – but
this generational opportunity to garner FDI and become a manufacturing and exportoriented economy has been squandered. Countries like Bangladesh and Vietnam have
walked away with the benefits.
Sops like corporate tax cuts and PLIs can’t compensate for a freer society, polity, and
economy – one that is free from demonetization-like masterstrokes, cronyism, and Raid
Raj. What India needs is not marginal policy tinkering, but a new, liberalised approach to
political economy.