Economic Survey 2025: A corporate bonanza of big profits but slow pay

In 2023-24, corporate profitability soared to its highest level since fiscal year 2008, with the profit-to-GDP ratio hitting 4.8%, more than double the 2.1% recorded in FY23. Sectors like financials, energy, and automobiles led the charge, posting robust earnings. But while corporate profits surged by a staggering 22.3%, employment grew by a meagre 1.5%, leaving millions of workers out of the prosperity loop. 

Also Read: What Economic Survey 2024-25 says on 7 challenges facing the government

An SBI report further highlights this disparity: while 4,000 listed companies saw modest 6% revenue growth, employee expenses rose only 13%, down from 17% in FY23. This suggests businesses are prioritizing cost-cutting over workforce expansion, with entry-level IT jobs and wage hikes bearing the brunt, the Economic Survey noted. Despite maintaining a steady Ebitda margin of 22% over the past four years, companies are reluctant to share the wealth with their employees.

“While some structural drivers of earnings growth—such as improved productivity and automation—are expected to persist, the heavy reliance on cost-cutting and restrained wage growth may not be a sustainable strategy," said Anirudh Garg, partner and fund manager at Invasset PMS.

“The sustainability of profits depends on revenue expansion, and signs of demand moderation in certain sectors could pose a challenge. If consumer spending slows or global growth weakens, companies may struggle to maintain their profit margins'" he added.

Also read | Economic Survey 2025 is worth preserving for this one piece of advice

The Survey also highlights a troublesome trend: corporate profits are increasingly concentrated among large firms. “While the labour share of GVA shows a slight uptick, the disproportionate rise in corporate profits—predominantly among large firms—raises concerns about income inequality," it noted.

The Q3FY25 corporate earnings reveal a similar, concerning trend: slowing wage growth alongside healthy profits, all against the backdrop of weakening revenue. An analysis of 772 companies from CMIE (representing 17% of listed companies and 57% of sales) shows topline growth has hit a multi-quarter low of 4.9% year-on-year. Despite this, profits rebounded to a respectable 9.2%, bouncing back after a tepid growth in the first two quarters of the fiscal. This profit growth, despite sluggish sales, is attributed to controlled expenses. Notably, operating expenses for non-financial companies were flat, and wage growth slowed significantly to 7.2% from 10.7% last year, suggesting a potential tightening of belts.

“One of the primary levers for margin expansion—muted wage growth—might not remain a viable tool in the long term. As inflation and labor market dynamics evolve, wage pressures could mount, eroding cost advantages," Garg said." “External factors such as geopolitical uncertainties, policy changes, interest rate fluctuations, and currency movements could introduce unforeseen headwinds. Any adverse global event or economic downturn could impact corporate profitability, particularly for export-driven sectors," he added further.

Also Read: Now, Economic Survey wades into India's working hours debate

The Economic Survey also reveals a troubling decline in earnings across self-employed and salaried workers over the past seven years. Male self-employed workers saw their monthly income drop by 9.1% to ₹8,591 in 2023-24 from ₹9,454 in 2017-18, while female self-employed workers faced a steeper 32.2% plunge to just ₹2,950. Salaried employees weren’t spared either—male salaried workers experienced a 6.4% decline in wages to ₹11,858, while female salaried workers took a harder hit with a 12.5% drop to ₹8,855.

“The Survey lays down the reality of decline in real wages over the last few years and has put out the issue of skill gaps very clearly," said Anandorup Ghose, Partner, CHRO Programme Leader, Human Capital Consulting, Deloitte India