Centre to India Inc: Profits Up, But Salary Growth, Hiring Lagging Behind

The Economic Survey for 2023-24 highlights the positive financial performance of India's corporate sector, noting that the profits of over 33,000 companies nearly quadrupled between FY20 and FY23. However, the survey points out that recruitment and salary growth have not matched this profit surge, stressing the need for companies to increase hiring and worker compensation.

Job creation is mainly driven by the private sector, but many factors influencing economic growth, job creation, and productivity fall under state governments' jurisdiction.

The survey calls for a tripartite compact between the Centre, states, and the private sector to achieve the goal of "Viksit Bharat by 2047."

The survey also examines the employment landscape, attributing economic shocks, such as bad debts and the Covid pandemic, rather than structural issues, to the changes in employment.

It notes a decline in overall employment in unincorporated enterprises from 11.1 crore in 2015-16 to 10.96 crores in 2022-23, with a major reduction in manufacturing jobs. However, the workforce in trade and services has expanded, mitigating the overall reduction in employment.

India has faced "two big economic shocks in quick succession": bad debts in the banking system and the Covid pandemic. The survey states that these shocks have made it challenging to conclude that the Indian economy's ability to create employment is structurally impaired but acknowledges the ongoing task of addressing these challenges.

The geopolitical environment also poses challenges for India's development, including the rise of Artificial Intelligence.

The survey contrasts the current global backdrop with the more stable and supportive environment during China's rise between 1980 and 2015. It emphasizes the need for a grand alliance of union and state governments and the private sector to overcome these barriers and achieve sustained high growth rates.

Finance Minister Nirmala Sitharaman introduced the Economic Survey in Parliament, stating that the Indian economy is on a "strong wicket and stable footing" and resilient in the face of geopolitical challenges.

"The economy has consolidated post-Covid recovery with policymakers - fiscal and monetary - ensuring economic and financial stability," the report concludes.