Survey: Higher profit share, stagnant wage growth slowing economy

• The Economic Survey warns that disparities between corporate profits and wages are causing economic risk by curbing demand.

• The rise in corporate profits, particularly among large firms, raises concerns about income inequality.

• The survey suggests that sustained economic growth relies on boosting employment incomes, which fuel consumer spending and investment in production capacity.

• A fair income distribution between capital and labour is crucial for long-term stability and supporting corporate revenue and profitability growth.

• Corporate profitability reached a 15-year peak in 2023-24, driven by growth in financials, energy, and automobiles.

• Despite a 22.3% increase in profits in FY24, employment grew by only 1.5%, and employee expenses rose only 13%.

• The survey also notes that labour market indicators in India have improved substantially in recent years, with a significant drop in unemployment rate.

• The survey advocates for an enabling labor regulations environment that supports business growth, creates employment, and promotes economic development.