The leading party in India likes to boast about India being the 5th largest economy in the world and how their leader is the only one responsible for it. But anyone who knows the “F” of finance knows that’s not how it works. A country's GDP says nothing about that country’s Financial Health. India ranks 5th right behind the US, China, Japan and Germany and just ahead of Italy, Canada, Russia, France and the UK but among all of these countries in the top 10, which country's residents have the most difficult time affording a decent standard of living? India. While India may have a large GDP, this metric alone fails to reflect the actual economic realities faced by most of its population. A huge portion of the workforce earns wages that barely cover their basic needs, let alone allow for a decent quality of life. The majority of Indians still live paycheck to paycheck, with little to no savings, due to low salaries, inflation, and a lack of substantial welfare programs.
In countries with similar GDP standings, citizens typically benefit from strong social safety nets, higher wages, and better access to healthcare and education. India, however, lacks a nationwide minimum wage policy for salaried employees, leaving millions of workers in the private sector vulnerable to exploitation, especially in roles serving multinational corporations. Foreign companies often hire Indian employees for a fraction of the cost of their Western counterparts, despite the employees often handling equally challenging responsibilities. The absence of a minimum wage standard exacerbates economic disparity and contributes to an uneven distribution of wealth.
Instituting a minimum wage policy, especially in foreign-affiliated companies, could help create a more balanced economy. For instance, if India enforced a minimum annual salary of ₹6,00,000 for Indian companies and ₹12,00,000 for foreign companies, it would significantly improve the standard of living for employees. This kind of policy would foster economic stability by increasing disposable income, thereby boosting demand for goods and services, which in turn stimulates economic growth. With higher wages, employees would also have an increased ability to save and invest, leading to better financial security and resilience.
Additionally, a minimum wage policy would address purchasing power parity (PPP) issues, as higher wages would enhance individuals’ ability to spend, thus increasing their contribution to the economy. By closing the wage gap between India and its Western counterparts, India could attract a more stable and productive workforce, reduce brain drain, and ultimately improve its GDP quality, not just its quantity.
Some companies may threaten to leave if a minimum wage policy is enforced, but this could be beneficial for India in the long run. Companies solely focused on exploiting low labour costs are often reluctant to invest in skill development or meaningful employee benefits. Losing these companies would open the door for businesses that are more invested in the local economy and committed to fair labour practices. Furthermore, the argument that India’s massive population justifies low per capita income is flawed, as China — another populous nation — maintains a per capita income exceeding $12,000, showing that economic growth and higher wages are possible on a large scale. China has succeeded not just by being a low-cost destination for labour but by cultivating a skilled workforce, supporting higher productivity, and gradually increasing wages.
The majority of companies, especially multinationals, are likely to remain in India despite higher wage standards. Even with increased wages, hiring costs in India would still be far lower than in Western countries, where employee benefits and salary expectations are much higher. Implementing a reasonable minimum wage would not drive away companies committed to sustainable, long-term growth in India but rather create a more stable, motivated workforce, which ultimately enhances productivity and innovation. By ensuring better compensation for Indian workers, India would foster a healthier economy while still maintaining its cost advantage for companies compared to Western counterparts.
A minimum wage for salaried employees in India is long overdue. It would serve as a crucial step toward creating a more equitable, robust economy that doesn’t merely look strong on paper but also provides tangible benefits to its people.