‘Middle class faces shift from salaried white-collar jobs towards gig work’: Saurabh Mukherjea
Second, small business vitality is weakening. Corporate tax data shows profits are increasingly concentrated among a handful of large firms, while smaller companies — which account for around 80% of employment — are under pressure. That affects both jobs and income distribution.
Third, even those with jobs are facing wage compression. Based on Nifty 50 annual reports and income-tax data, we estimate real white-collar wages have effectively declined by about 5% annually over the past decade.
Are we late to rethink the growth model?
Yes and no. Yes, because every prime minister has attempted to build a manufacturing-led economy, and we have underachieved. But also no, because current conditions are creating a fresh opportunity — a more competitive exchange rate, free trade agreements with the West, and the China-plus-one shift. We may have missed the manufacturing export bus once. But the bus is returning — and this time we can’t afford to miss it.
So, you see manufacturing-led growth as India’s next phase?
It will have to be. We have little choice. India needs to pivot from being primarily an IT services exporter to becoming a manufacturing exporter — across sectors such as textiles, footwear, machine tools, precision engineering, auto components, pharmaceuticals and chemicals.
At an exchange rate of around ₹110 to the dollar, India could be highly competitive — even relative to countries like Bangladesh and Vietnam — especially in markets opened up through FTAs.
But would the government or RBI allow the rupee to depreciate that much?
We are a market economy — governments don’t fully control exchange rates.
With IT exports slowing, FPI flows negative and FDI moderating, there may be limited alternatives to a weaker rupee. The Reserve Bank of India may smooth volatility, but market forces will determine the direction.
A depreciation of around 10% annually could persist, potentially taking the rupee close to ₹110 per dollar by the time FTAs with Europe and the UK come into effect.
