Profit Surge, Hiring Hiccup: Centre’s Surprising Guidance To India’s Business Sector

The corporate sector in India has demonstrated impressive financial performances, yet the growth in recruitment and employee salaries has not matched the companies’ profit surge, according to the Economic Survey for 2023-24. The government emphasized that job creation primarily occurs in the private sector, stating, “In terms of financial performance, the corporate sector has never had it so good. Results of a sample of over 33,000 companies show that, in the three years between FY20 and FY23, the profit before taxes of the Indian corporate sector nearly quadrupled. However, hiring and compensation growth hardly kept up with it. It is in the interest of the companies to step up hiring and worker compensation.”

Economic Survey 2024

The Economic Survey highlighted that many factors influencing economic growth, job creation, and productivity fall under the jurisdiction of state governments. It called for a collaborative effort between the Centre, states, and the private sector “to meet the higher and rising aspirations of Indians and complete the journey to Viksit Bharat by 2047.”

The survey also revealed that economic shocks, such as bad debts and the COVID-19 pandemic, rather than structural problems, have impacted the employment landscape in the country. “The Annual Survey of Unincorporated Enterprises for 2022-23, when compared with the results of the NSS 73rd round of the ‘Key Indicators of Unincorporated Non-Agricultural Enterprises (Excluding Construction) in India,’ shows that overall employment in these enterprises fell from 11.1 crore in 2015-16 to 10.96 crores. There was a reduction of 54 lakh workers in manufacturing, but the expansion of the workforce in trade and services limited the overall reduction in the number of workers in unincorporated enterprises to around 16.45 lakhs between these two periods. This comparison masks a significant increase in manufacturing jobs that appears to have occurred between 2021-22 (April 2021 to March 2022) and 2022-23 (October 2022 to September 2023),” the survey stated.

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India experienced “two major economic shocks in quick succession,” the survey noted. “Bad debts in the banking system and high corporate indebtedness were one. It took the first term of the present government and more to bring it under control. The Covid pandemic was the second shock and quickly followed the first one. So, it is difficult to conclude that the Indian economy’s ability to create employment is structurally impaired. Nonetheless, going forward, the task is cut out.”

The Economic Survey also addressed the geopolitical challenges India faces in its quest to become a developed country, including the impact of Artificial Intelligence. “Between the last Economic Survey published in January 2023 and this one, significant changes are occurring in the geopolitical environment. The global backdrop for India’s march towards Viksit Bharat in 2047 is markedly different from what it was during China’s rise between 1980 and 2015. Then, globalization was at the cusp of its long expansion. Geopolitics was largely calm with the end of the Cold War, and Western powers welcomed and even encouraged the rise of China and its integration into the world economy.

“Concerns over climate change and global warming were not as pervasive or grave then as they are now. Additionally, the advent of Artificial Intelligence casts significant uncertainty on its impact on workers across all skill levels—low, semi, and high. These factors will create barriers and challenges to sustained high growth rates for India in the coming years and decades. Overcoming these requires a grand alliance of union and state governments and the private sector,” the survey concluded.