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Representational image (Source/Unsplash)
Indian private sector companies should pick up the job creation baton from the government and invest in new manufacturing capacities so that the country can “complete its journey to Viksit Bharat by 2047”, the Economic Survey said.
While admitting that Indian companies’ investments have gone up post-Covid in fiscal 2024, the Survey emphasised that employment generation is the real bottom line for the private sector. “It is worth reiterating that job creation happens mainly in the private sector. Second, many (not all) of the issues that influence economic growth, job creation, and productivity and the actions to be taken therein are in the domain of state governments. So, in other words, India needs a tripartite compact, more than ever before, to deliver on the higher and rising aspirations of Indians and complete the journey to Viksit Bharat by 2047,” the Survey said.
The Survey said in terms of financial performance, the corporate sector has never had it so good. Quoting the results of over 33,000 companies, the Survey said in the three years between FY20 and FY23, the profit before taxes of the Indian corporate sector nearly quadrupled and, as per media reports, the corporate profits-to-GDP ratio also rose to a 15-year high in FY24.
“Hiring and compensation growth hardly kept up with it. But, it is in the interest of the companies to step up hiring and worker compensation. The Union government cut taxes in September 2019 to facilitate capital formation. Has the corporate sector responded?” the Survey asked, adding that between FY19 and FY23, the cumulative growth in private sector non-financial gross fixed capital formation (GFCF) is 52 per cent in current prices. During the same period, the cumulative growth in general government (which includes states) is 64 per cent. “The gap does not appear to be too wide. However, when we break it down, a different picture emerges. Private sector GFCF in machinery and equipment and intellectual property products has grown cumulatively by only 35 per cent in the four years to FY23. Meanwhile, its GFCF in ‘dwellings, other buildings and structures’ has increased by 105 per cent. This is not a healthy mix,” the Survey said.
Besides, the Survey warned that the slow pace of investment in machines and equipment and intellectual property (IP) products will delay India’s quest to raise the manufacturing share of GDP, delay the improvement in manufacturing competitiveness, and create only a smaller number of higher-quality formal jobs than otherwise.
For India’s working-age population to be gainfully employed, they need better skills and good health, the Survey said. “Social media, screen time, sedentary habits, and unhealthy food are a lethal mix that can undermine public health and productivity and diminish India’s economic potential. The private sector’s contribution to this toxic mix of habits is substantial, and that is myopic,” said the Survey.
“The emerging food consumption habits of Indians are not only unhealthy but also environmentally unsustainable. India’s traditional lifestyle, food and recipes have shown how to live healthily and in harmony with nature and the environment for centuries. It makes commercial sense for Indian businesses to learn about and embrace them, for they have a global market waiting to be led rather than tapped,” the Survey said.
First Published: Jul 22 2024 | 6:13 PM IS