Despite steady growth in India’s Gross Value Added (GVA) over recent years, the gains have not been equitably shared with the workforce, as wages have failed to keep pace with rising profits.

Data from the National Accounts of Statistics (NAS), cited by The New Indian Express, shows a decline in the share of employee compensation in GVA—from 53.5% in 2019–20 to 51.85% in 2023–24.

While wages have historically constituted about one-third of the overall GVA, the latest figures indicate a downward trend, particularly between 2022–23 and 2023–24. Sectoral analysis reveals that the most significant declines in wage share occurred in electricity, gas, and water supply, followed by mining and quarrying.

In contrast, real estate saw a marginal increase in compensation share, though this was offset by a sharp drop in the construction sector.

The decoupling of wage growth from rising corporate profits is raising concerns among economists about deepening inequality and its impact on consumer demand. They warn that this disparity could have long-term implications, potentially dampening job creation and hindering overall employment growth.

Reinforcing these concerns, the Centre for Monitoring Indian Economy (CMIE) has reported a fall in consumer sentiment, suggesting that weakening wage growth may already be contributing to a slowdown in demand.