Employees' salaries grew at 11% CAGR in 10 years: FM Nirmala Sitharaman

FM Sitharaman says factors of production being reset after pandemic

The compensation of employees has seen a compound average growth of 11.1 per cent in the first 10 years of the Prime Minister Narendra Modi government, including the post-Covid years, Finance Minister Nirmala Sitharaman told the Parliament on Tuesday, while highlighting the churn in the industry with factors of production being reset and use of robotics and web 3-driven output.

 

“One of the long-term impacts of Covid has affected the nature of work itself. People are either chosen to work from home or they don't want to work full time,” Sitharaman said in a discussion of second supplementary demands for grants and the Manipur Budget FY26 in the Rajya Sabha.

 

 

The latest Economic Survey had highlighted the huge disparity between the profit and wage growth of companies, stressing that aligning profit growth with wage increases is essential for sustaining demand and supporting corporate revenue and profitability growth in the medium to long run.

 

The FM said that India’s household debt to GDP ratio was far lower compared to its peer group and some of the advanced economies.

 

“People are talking of it (household debt) as though India's is high because of the way in which we handled Covid. I'm sorry they are wrong,” FM stated.

 

Sitharaman said that the Make in India programme had not failed, but given a great momentum to manufacturing in the country. She said that India's manufacturing sector has faced significant challenges due to external externalities, and not due to anything to do with India. 

 

On production-linked incentive (PLI) schemes, the FM noted that it had attracted investments worth ~1.5 trillion so far and created 950,000 jobs.

While highlighting that domestic defence production in India had reached a record high of ~1.27 lakh crore, Sitharaman cited the example of how Bihar boots were now part of the Russian army's equipment.

 

Criticising the quick fix Free Trade Agreements signed during the UPA regime, the FM said that the commerce ministry was struggling to have those agreements reviewed.

 

Exaggerated haircuts in IBC

 

Replying to a question of haircuts taken by banks under the Insolvency and Bankruptcy Code (IBC), Sitharaman said that the high numbers were exaggerated. 

The FM said that creditors had realised 169 per cent of liquidation value under the IBC regime.

 

“The laid down procedures talk about the liquidation value on the basis of which you recover, and that is what is counted when you are talking of IBC resolution process… Looking at it from the value of claims alone does not count for what I will perceive as a haircut,” she said.

 

The FM gave examples of cases such as Essar Steel, MBL Infrastructure and Binani Cement where realisation as percentage of admitted claims was in the range of 77 to 99 per cent.