Pay cheque pinch hits consumer demand

The slowdown in consumer demand in recent quarters can be traced to a deceleration in salary and wage growth across corporate India.

- KRISHNA KANT

Listed companies are now reporting wage growth in the low single digits, a sharp departure from the double-digit increases seen until the last financial year.

Historically, net sales growth for consumer goods companies has closely tracked the growth in salary and wage expenses of listed firms, making the current trend a potential drag on broader consumption.

In the July-September quarter (Q2FY25), the combined salary and wage expenses of 3,515 listed companies in the Business Standard sample grew 7.7 per cent year-over-year, down from 14.2 per cent in the same period a year earlier. While this represents a slight improvement from the 7.2 per cent growth seen in Q1FY25, it marks the third consecutive quarter of single-digit uptick.

Between Q1FY22 and Q3FY24, these expenses had grown in double digits for 11 straight quarters.

When a public sector undertaking (PSU) raises funds through the QIP route, the money goes to the company because it involves issuing new shares whereas in the case of OFS, the funds raised goes to the government because its shares are sold.