Company revenue document excessive, salaries stagnant: Ficci report says mismatch impeding India’s GDP progress

A report by the Federation of Indian Chambers of Commerce and Trade (Ficci) and Quess Corp Ltd has raised considerations at some ranges within the central authorities amid declining price of financial progress. The report talks a couple of document excessive revenue by the non-public sector, with stagnation in salaries of the employees — one of many causes for sluggish non-public consumption, a key driver of financial progress.

India’s gross home product (GDP) progress of 5.4 per cent within the second quarter (July-September) of monetary yr 2024-25 has raised considerations amongst policymakers. Towards this backdrop, the Ficci-Quess report revealed that the non-public sector recorded 4 occasions progress in revenue throughout 2019-23. However there was low single-digit revenue progress within the company sector, leading to dwindling demand.

The report stated the compounded annual wage progress price throughout six sectors ranged between 0.8 per cent for the engineering, manufacturing, course of and infrastructure (EMPI) corporations and 5.4 per cent for fast-moving client items (FMCG) industries.

It additionally stated that employees, together with these in formal sectors, witnessed a meagre or unfavourable progress in actual incomes, calculated as progress in wage adjusted in the direction of value rise or inflation.

Within the 5 years from 2019 to 24, annual retail inflation maintained its upward march with 4.8 per cent, 6.2 per cent, 5.5 per cent, 6.7 per cent and 5.4 per cent, respectively.

Findings from Ficci-Quess survey

The Ficci-Quess survey findings aren’t out there within the public area. The Indian Specific, which acquired entry to it, reported that the survey confirmed the compounded annual progress price (CAGR) for wages throughout 2019-23 was the bottom for the EMPI sector at 0.8 per cent and the best for the FMCG sector at 5.4 per cent.

For BFSI (banking, monetary companies, insurance coverage), wages grew at 2.8 per cent and for the retail sector, the expansion was 3.7 per cent throughout the identical interval. Wages grew at 4 per cent within the IT sector, whereas for logistics, the expansion was 4.2 per cent.

In absolute phrases, the common wage was the bottom for the FMCG sector at Rs 19,023 in 2023, and highest for the IT sector at Rs 49,076 in 2023.

The survey calculated the common gross wage on the idea of the cumulative wage of all workers throughout completely different job roles in a specific sector and dividing it by the full variety of workers.

It additionally famous that the wage progress is indicative and never definitive as a result of the wage varies based mostly on job roles, with some job roles getting increased wages than the remaining.

The Indian Specific quoted sources within the authorities as saying that one of many key causes for subdued consumption, particularly in city areas, was weak revenue ranges.

“Publish-Covid, consumption rose with pent-up demand, however the slower wage progress has delivered to the fore considerations a couple of full financial restoration to the pre-Covid part,” the report cited a supply within the authorities as saying.

On December 5, whereas addressing Assocham’s Bharat @100 Summit, Chief Financial Advisor V Anantha Nageswaran emphasised that there needs to be a greater steadiness between the share of revenue going to capital when it comes to earnings and the share of revenue going to employees as wages.

“With out that, there is not going to be sufficient demand within the financial system for corporates’ personal merchandise to be bought. In different phrases, not paying employees, or not hiring employees sufficient, will find yourself being truly self-destructive or dangerous for the company sector itself,” Nageswaran had stated.

He instructed that India Inc ought to study the difficulty to handle it appropriately for the general financial progress of the nation.