Rural wage growth for men for both agricultural and non-agricultural occupations (simple average) was 3.53% in March from a year ago. But consumer price inflation for rural India was 4.44% in March. That means the real rural wage growth, or wage growth after taking inflation into account, was negative during the month. In other words, real rural wages, far from seeing any growth, contracted from a year ago. The accompanying chart shows that this is not an isolated instance, but has instead been happening every month since November 2017.
The chart shows how rural workers’ real wage rate growth was very high in 2014, but has fallen dramatically since then. Although they moved back into modestly positive territory last year, they’re back into contraction mode now.
The government’s announcement of higher minimum support prices for farm produce should, however, trickle down into higher rural wages too. It remains to be seen, though, whether the growth in wages will be higher than the inflation rate.