Higher corporate efficiency also behind lower wage growth

The trend of manufacturing companies outsourcing services impacted wage growth in India, Sanjiv Puri, president of the Confederation of Indian Industry (CII), said in an interview with Priyansh Verma & Raghav Aggarwal.

Companies becoming more efficient, too, has impacted headcount and wages. Puri also said that consumption in India is "under stress" right now, but could improve in the next two quarters. Excerpts:

What should the Budget do to boost consumption?

We've a strong economic foundation. There are certain measures that will have an impact in the near term, and some which will provide impetus to consumption over a longer period of time. I think the budget should announce some cuts in personal income tax rates for individuals earning up to ₹20 lakh per annum, reduce excise duty (less) on petroleum products, and increase wages under MGNREGA to stimulate consumption in the near term. Also, we don't expect the government to go for any tighter fiscal consolidation than 4.5% of GDP in FY26. Else, growth will be impacted. Additionally, public capex should be increased by 25% in FY26 over the ₹11.11 lakh crore Budget estimate for FY25. Monetary policy should be eased, as lower interest rates typically support growth. In FY26, CII expects GDP growth to be around 7%. We need to take many steps for growth rate to be 8-8.5%.

The first advance estimates show private consumption growing at 7.3% in 2024-25 as against 4% last fiscal. Does this signal that the widely reported urban demand slowdown is overstated?