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Companies in clover, but there's something in the economy that's amiss

Today, far too many people earn far too little to support consumption growth of the kind the economy needs, notes T N Ninan

Topics
Indian Economy | Weekend Ruminations | Gross Domestic Product (GDP)

T N Ninan 



T N Ninan

The economy may be faced with many uncertainties, but Corporate India has pulled through a difficult decade and is now in a position where it has never had it so good. For a sample of 2,785 companies listed on the stock exchanges, net profits in 2021-22 were 9.7 per cent of sales, a level not seen in the last decade and probably not since the financial crisis of 2008 (Data source: Capitaline). Just a little more than two years ago, in 2019-20 (mostly pre-Covid), profits were as low as 3.4 per cent of sales. The best year before the latest one was 2016-17, when the profit margin was 7.2 per cent. In most other years, it hovered around the 6 per cent mark, give or take a bit. Against that backdrop, 9.7 per cent is stratospheric.

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First Published: Fri, June 03 2022. 19:00 IST

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