Rise in Share of Profit in GVA Has Not Translated into Increase in Wages: Report
The Wire Staff
New Delhi: While there has been a sustained rise in profits in India’s gross value added (GVA), it has not translated into consistent rise in wages.
Estimates from the national accounts of statistics (NAS) reveal that the share of employee compensation in GVA dropped from 53.5% in 2019–20 to 51.85% in 2023–24, reported New Indian Express.
Whereas compensation remained around one-third of the overall GVA, it decreased between 2022–23 and 2023–24.
The electricity, gas and water supply sectors saw the biggest drop in wage share followed with mining and quarrying. While the real estate sector did register a small rise in the share of compensation, the construction sector saw a sharp decline.
The fact that the wage share has decreased when there has been a rise in profits raises serious questions about growing inequality and weakening consumer demand. In the long run, economists caution that such a situation can reduce job creation and damage overall employment growth.
The Centre for Monitoring Indian Economy (CMIE) has also reported a dip in consumer sentiment, which suggests a potential slowdown in demand.
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