Citi India has published a thought-provoking report that sheds light on the prevailing economic landscape. Led by Economist Samiran Chakraborty, the Citi India team has conducted an extensive study of the first quarter results of 3,500 companies, and found that wage cost of companies in the country has seen a decline during the April-June quarter as compared to the previous year.

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Samiran Chakraborty, Chief India Economist at Citi, who elaborated on these findings during an interview with CNBC-TV18, noted; "There is a slight year-over-year moderation in the wage cost of the companies, hovering around 13-13.8 percent in the previous quarter. However, when we examine the sequential momentum, it's clear that it has surpassed historical trends."

This seemingly contradictory data prompts an intriguing question: why does the job market appear to be under more pressure than wage data would suggest? One possible explanation lies in the fact that urban consumption has outpaced rural consumption for some time now. Chakraborty predicted that this trend is likely to persist in the foreseeable future.

Chakraborty did acknowledge a degree of caution regarding urban consumption. He pointed out that this caution stems from both the employment side and the expenditure of excess savings accumulated during the pandemic. Nevertheless, he remains optimistic about the trajectory of urban consumption, asserting that it will continue to outperform rural consumption for the time being.

Later this week, India will eagerly await the release of its Gross Domestic Product (GDP) figures for the April-June quarter.

Chakraborty predicts that the decline in GDP for the April-June quarter will be more pronounced than is typically observed in the first quarter. Traditionally, the first quarter tends to be a weaker period for GDP growth.

For more details, watch the accompanying video

(Edited by : C H Unnikrishnan)

First Published:Aug 29, 2023 4:51 PM IST