Inequality on the rise, welfare in retreat: Modi govt’s economic growth numbers under fire from Congress

Ahead of the Union Budget, the Congress on Tuesday, 27 January, released a report titled “The Real State of the Economy 2026”, arguing that inequality in India is rising sharply while welfare spending is steadily being rolled back under the Modi government.

The party also issued a point-wise rebuttal of what it called the government’s “manufactured growth narrative”.

Addressing the media, Prof. Rajeev Gowda, former MP and Chairman of the All India Congress Committee (AICC) Research Department, accused the Centre of being “fixated on slashing welfare”.

“The Modi government is dismantling the social safety net for the poor, the youth, farmers and women — the four ‘castes’ the Prime Minister claims to care about,” Gowda said. He added that the government’s “triumphalist propaganda” echoed the hubris of the India Shining campaign under an earlier NDA regime.

AICC's research department member Amitabh Dubey said that growth benefiting only a small elite could not be termed success. “Rising inequality and shrinking welfare are warning signs of massive economic mismanagement. Sound policy must be based on honest data. We ask the government to place real numbers before the country, not manipulated figures that mislead the people,” he said.

The report presents an evidence-based assessment of the Indian economy and challenges official claims on growth, employment and investment.

Highlighting concerns over data credibility, the Congress noted that the IMF has given India’s statistics a “C” grade and cited former Chief Economic Adviser Arvind Subramanian, who has argued that India’s GDP growth may be overstated by around 2.5 percentage points.

Raising questions about household finances, the report asked why household savings have collapsed while household debt has risen sharply, pointing to a widening gap between official statistics and people’s lived realities.

It also noted that in four out of ten months in 2025, net foreign direct investment (FDI) was negative, meaning more capital flowed out of India than came in.

Reversal of Structural Transformation

According to the report, India witnessed a reversal in structural transformation between 2017–18 and 2023–24:

• Manufacturing employment fell from 12.1 per cent to 11.4 percent

• Services employment declined from 31.1 per cent to 29.7 per cent

• Agricultural employment rose from 44.1 per cent to 46.1 per cent, indicating a return to low-productivity work due to inadequate job creation in manufacturing

The report said job growth has been concentrated in informal and gig work, with 40 per cent of salaried workers lacking contracts, paid leave or social security. While corporate profits grew by 22.3 per cent in 2023–24, employment increased by only 1.5 per cent.

Youth unemployment, the report says, touched 15 per cent in September 2025, rising to 18.4 per cent in urban areas. “One in four urban young women who want to work is unable to find a job,” the report said.

Inequality and Tax Burden

The report documents a sharp rise in inequality:

·        The top 10 per cent earn 58 per cent of national income, while the bottom 50 per cent receive only 15 per cent

·        The top 1 per cent own 40 per cent of total wealth, compared to just 6.4 per cent held by the bottom 50 per cent

·        The tax burden has shifted from corporates to ordinary citizens, with individuals’ share in total direct taxes rising from 38.1 per cent in FY14 to 53.4 per cent in FY24

Welfare Rollback and Human Development in Retreat

On MGNREGA, the report said the rights-based employment scheme had been systematically weakened even before being replaced by the restrictive VB-G RAM G:

·        Fewer than 2% of households received the guaranteed 100 days of work

·        Average employment fell to just 37 days in FY 2025–26

·        Large numbers of poor households were excluded due to technological barriers

The report also highlighted setbacks in human development. On nutrition and health:

• 12 per cent of Indians remain undernourished

• 31 per cent of children under five are stunted

• 59.1 per cent of adolescent girls and 52.2 per cent of pregnant women are anaemic

• Pollution, described as “silently killing large numbers of Indians”, has been largely ignored

On education, the report pointed out:

• School enrolment fell from 25.18 crore to 24.69 crore in two years

• 68 lakh students dropped out in 2024–25, including 32 lakh girls

• Over 3.5 lakh teacher posts remain vacant

• Funding for higher education has declined by 55 per cent over the past decade

• Student suicides have increased by 65 per cent in the last ten years

The Congress also flagged cuts to the National Social Assistance Programme (NSAP), which provides non-contributory support to the elderly, women and persons with disabilities.

Calling the "Make in India initiative" a failure, the report highlighted stagnation in manufacturing sector and decline in MSMEs.