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Economic Survey: Profit of Companies have increased but staff strength not increased


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The Indian corporate sector has experienced significant financial growth in recent years. The Economic Survey for 2023-24 reveals that profits in the sector have surged dramatically. Over 33,000 companies have shown a nearly fourfold increase in profit before taxes from FY20 to FY23.

Disparity in Job Creation and Employee Compensation

Despite this financial prosperity, the increase in job creation and employee compensation has not kept pace. The Economic Survey stresses the importance for companies to boost hiring and worker compensation to align with their financial gains.

Role of State Governments and Collaborative Efforts

The survey points out that many factors influencing economic growth, job creation, and productivity are under the jurisdiction of state governments. It calls for a collaborative effort between the Centre, states, and the private sector to meet the rising aspirations of Indians and achieve the goal of Viksit Bharat by 2047.

Impact of Economic Shocks on Employment

The country’s employment scenario has been shaped more by economic shocks such as bad debts and the Covid-19 pandemic rather than structural issues. The Annual Survey of Unincorporated Enterprises for 2022-23 indicates a decrease in overall employment in these enterprises from 11.1 crore in 2015-16 to 10.96 crore. The manufacturing sector saw a reduction of 54 lakh workers, but job growth in trade and services limited the overall job loss to around 16.45 lakh.

Increasing Compensation Gap

According to an Economic Times study of 35 top-listed companies, the compensation gap between chief executive officers and median employees in India’s leading companies has widened since the pre-pandemic period. Companies such as Hindustan Unilever, Indian Hotels Co, EIH Ltd, Infosys, Larsen & Toubro, Sun Pharma, Titan, Tata Steel, JSW Steel, Wipro, Dr. Reddy’s Laboratories, Dabur, Voltas, and Mphasis have reported an increase in the CEO-to-median employee pay ratio in 2023-24 compared to 2019-20.

Significant Increase in Pay Disparity

Most companies have seen a 20-60% increase in this ratio, with some, including ITC, Bajaj Electricals, Mahindra & Mahindra, and Whirlpool India, experiencing a near doubling of the gap.

In conclusion, while the Indian corporate sector has seen remarkable financial growth, it has not been matched by proportional increases in job creation or employee compensation, highlighting a significant area for improvement as India aims for comprehensive economic development by 2047.

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