Modi govt in panic mode over economy, alleges Congress' Jairam Ramesh

Congress' Jairam Ramesh attacked the Centre, alleging the Modi govt is in 'panic mode' over the economy. He cited reports of a plan to scrap the 12.5% LTCG tax for FPIs, calling it a 'band-aid' for deeper structural problems.

Congress leader Jairam Ramesh on Thursday launched a sharp attack on the Centre, alleging that the Modi government is "in panic mode" and is facing pressure from within its own ecosystem over the prevailing economic situation.

In a post on X, Jiaram worte, "The Modi Govt is clearly in panic mode and is under siege from within its ecosystem on the current economic situation."

Congress Alleges Govt Planning Tax Ordinance

Citing a television news flash, Ramesh claimed that the government is considering bringing an ordinance to amend the Income Tax Act to completely remove the 12.5 per cent long-term capital gains tax on investments made by Foreign Portfolio Investors (FPIs) in Indian government securities. "According to a news flash by a TV channel that is plugged into the ruling establishment, the Modi Govt is planning to issue an ordinance amending the Income Tax Act to completely eliminate the 12.5% long-term capital gains tax on investments made by foreign portfolio investors (FPIs) in Indian government securities. This rate was fixed in the Union Budget of July 2024," Jairam stated.

'Band-Aid Solution vs Structural Issues'

Ramesh argued that the reported move, if implemented, would amount to a "band-aid" solution rather than addressing deeper structural issues in the economy. He said that private corporate investment in India remains weak despite record-high corporate earnings, adding that investment as a share of GDP has declined. Jairam said, "The real problem is that private corporate investment is very tepid within India. Those who can and must invest in India are either investing abroad or postponing investments at home. Corporate earnings are at record highs, but yet the rate of private corporate investment as a % of GDP has actually declined in a marked manner. Band-aid ordinances may provide headlines but are no substitute for addressing the structural causes of depressed rates of private corporate investment."

Deeper Economic Woes

He further alleged that factors such as stagnating real wages, widening income and wealth inequality, increasing concentration of economic power, and an "intimidatory atmosphere" created by the alleged misuse of investigative agencies. "These include stagnation in real wages, sharpening income and wealth inequalities, ever-increasing concentration of economic power in sector after sector, and an intimidatory atmosphere created by the misuse of investigative agencies. Allowing imports from China to keep growing has only added to domestic investment woes," Jairam added. (ANI)

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