Congress Highlights Auto Industry Woes Amid Rising Inequality

The Congress claims a decline in passenger car sales signals increasing inequality and stagnant incomes, noting a shift towards SUVs and exports. Growing inequality, stagnant wages, and weak investment are emphasized. Domestic consumption struggles, with calls for reform on tax policies and GST complexities amid government criticism.

The Congress party has flagged a troubling trend in the Indian automotive market, claiming it highlights deepening economic inequality and stagnant incomes. According to Congress general secretary Jairam Ramesh, a substantial drop in the share of passenger cars, from 65% in 2018-19 to 31%, points to a larger issue: most Indians are being locked out of the consumption economy. The party also observed a rising share of sport utility vehicles (SUVs) among first-time buyers, suggesting a shift in consumer behavior amid economic challenges.

Ramesh argued that this shift indicates a decoupling of car sales from GDP growth, traditionally seen as an economic health indicator. He attributed the trend to weak domestic consumption and a move by manufacturers towards export markets, given the lack of investment incentives domestically. Additionally, the stagnant wages across various sectors, especially amid medium to high inflation, mean that the lower and middle classes are struggling to transition to new categories, like passenger cars, from two-wheelers.

Criticizing the government's economic policies, Ramesh claimed that domestic investment remains stalled due to 'tax terrorism' and a complex GST system. He accused the BJP-led government of promoting a climate of fear, citing multiple raids on corporates and hinting at systemic issues in governance and policy reform. Without effective demand and investment growth, he said, the economy risks continued stagnation, exacerbating the divide between socioeconomic classes.

(With inputs from agencies.)