According to official national income figures, India’s economy is growing rapidly. However, national income, or GDP, is not a directly observed fact, but a construct. Much depends on how it is constructed out of directly collected data; and the current GDP series has been controversial from the day it was introduced.
More to the point than this ‘national income’ is the incomes of the vast majority of working people. By contrast with national income, official data regarding wages are directly observed. By discounting for price rise, we can calculate real wages, i.e., how much the wages can buy. This gives us a different picture of the economy: one of stagnating or declining wages. This fact would account for the depressed state of industries producing mass consumption goods. Let us look at some of these data.
(1) Real wages per worker in the organised factory sector in 2022-23 (the latest available year) were 0.5 per cent lower than four years earlier, in 2018-19.1
(2) Real rural wages have remained stuck at virtually the same level for nearly a decade now. Chart 1 is reproduced from the Economic Survey 2024-25, providing the picture between May 2021 and September 2024. What this shows is that the average year-on-year growth rate of real wages for the entire period was just 0.3 per cent for agricultural labour, and -1.0 per cent for non-agricultural rural labour.
Chart 1: Year-on-year Real Growth in Rural Wages, Men
Brick kiln workers are drawn from the poorest and most oppressed social sections, such as Dalits and Adivasis. On the basis of data collected by the Centre for Labour Research and Action regarding kilns in Rajasthan and Gujarat, Jean Drèze calculated that the real wages of these workers actually fell between 2014 and 2022 (Chart 2).
(3) In the period since 2017-18, the real wages of salaried/regular workers have fallen by 6 per cent for men, and 13 per cent for women. Wages are expressed in 2012 prices in Chart 3 below.
(4) The incomes of self-employed workers have fallen even more steeply over the same period, by 9 per cent for men and 32 per cent for women, as seen in Chart 4, on the facing page. (It should further be noted that earnings for self-employed workers are calculated by excluding those self-employed persons who reported earning as zero.)
This reflects the condition of the majority of workers in India. The proportion of self-employed workers was already 52 per cent of the workforce in 2017-18. It has now risen to over 58 per cent in 2023-24. The Economic Survey tries to spin this, saying that “This shift reflects growing entrepreneurial activity and a preference for flexible work arrangements,” but in fact the rising figures of self-employment reflect the desperation of the unemployed to eke out a living somehow, either on the farm, or in petty production or petty trade. Meanwhile the share of workers in regular/salaried jobs decreased from 23 per cent to 22 per cent during the same period.
(5) The real daily wages of casual workers did rise (by 19 per cent for men and 24 per cent for women), but evidently they received fewer days of work. The share of casual workers in the workforce declined sharply, from 25 per cent to 20 per cent, over this period.
(6) The fall in real wages appears to be even steeper in some of the newer sectors, which are touted as the future of jobs. Data from an NCAER study of food delivery platform workers show that their real incomes fell by 24 per cent between 2019 and 2022.2
Even more surprising are the facts reported in a recent note by a website, ‘Careers360’: The entry-level salaries in two of India’s leading software firms, TCS and Infosys, have stagnated in nominal terms for the past 15–18 years, amounting to a steep fall in real terms: while an Assistant Systems Engineer Trainee at TCS received Rs 3.15 lakh per annum in 2007, he/she received Rs 2.95-3.36 lakh per annum in 2024, a 60 per cent fall in real terms. A Systems Engineer Trainee at Infosys Rs 3.25 lakh per annum in 2010, and Rs 3.6 lakh per annum in 2024, a 49 per cent fall in real terms. Careers360 says that the situation is similar in all the other top software firms.3 The note points out that this has taken place even as the costs which these engineers would have had to incur for their education have multiplied; this implies that they will take much longer to repay their educational loans.
Demand depression
All these developments have resulted in the depression of demand for ordinary goods of mass consumption. This can be seen in the Index of Industrial Production (IIP) data. The growth of consumer non-durables – largely items of daily use such as soap, detergent, toothpaste, tea powder, food products, medicines, paper, and so on, has been trending downward for some years.
Well before the Covid lockdown, non-durables production was already slowing down. During the Covid period, expectedly, production fell outright; it then recovered after the lockdown ended. However, in the two and a half years, production has been falling outright again.
Some other items of mass consumption are strangely classified by the IIP as “consumer durables”, presumably on the ground that they last more than a year. However, it makes more sense to group textiles, apparel, and leather goods with soap and toothpaste rather than with automobiles and electronic items. The production of textiles, apparel and leather goods provides a similarly grim picture.
The above data provide glimpses into the depression of consumption by the vast masses of Indians, not only in relative terms, but in absolute terms.
Since the industries manufacturing goods of mass consumption tend to be relatively labour-intensive, the paucity of demand for these goods would have an impact on employment itself. For example, it is estimated that the entire textile value chain, from fibre to spinning to fabric to processing to garments, generates employment for 45 million – one of the largest sources of employment in the country. Government efforts to generate demand for Indian textiles are focussed exclusively on increasing India’s exports, which accounts for about a fifth of demand. The growth of domestic demand for textiles is linked to a rise in people’s incomes. A similar story could be told of other items of mass consumption.
- Annual Survey of Industries data, deflated by CPI (IW). ↩︎
- RUPE, “Who Loses, Who Gains?”, October 7, 2023, https://rupeindia.wordpress.com/2023/10/07/who-loses-who-gains/#more-2524 ↩︎
- Careers360, “The Harsh Truth Behind College Placements with TCS, Infosys, Wipro, Accenture, Cognizant etc…”, June 5, 2025. https://engineering.careers360.com/articles/the-harsh-truth-behind-college-placements-tcs-infosys-wipro-accenture-cognizant-etc ↩︎