Why India’s labourers can’t afford to buy a packet of biscuits for Rs 5

Trouble is, the distribution of the Indian economic pie is more lopsided than the aggregate numbers suggest

Economy News: When snack makers start to lament that Indians can’t afford to spend 5 rupees (7 cents) on biscuits, it’s time to stop arguing over how much of the nation’s slowdown is cyclical and what part is structural.

Considering its glaring income, wealth and consumption inequalities, India is a surprisingly calm society. However, when purchasing power dries up to the extent that rural laborers and urban blue-collar workers have to think twice about cheap munchies, then the situation is desperate. The culprit is deep-rooted wage suppression, a long-term issue that needs attention.

Britannia Industries Ltd., the No. 1 Indian biscuit maker, recently sounded alarm bells over the sharp deceleration in its domestic sales volumes. Rival Parle Products Pvt. chimed in and said jobs were at risk for as many as 10,000 of its workers.

A Parle executive blamed India’s 2017 goods and services tax, or GST. While the consumption tax may indeed have been an additional burden in an economy slowing under a disastrous November 2016 currency ban, the funk has its roots in insufficient wages. In recent years, only about a third of the economy’s income has gone to labor, with providers of debt and equity capital taking the rest, according to India Ratings and Research Pvt., a unit of Fitch Ratings…

Read More: Indian Economy

Parle may cut up to 10,000 jobs, slash production as slowdown bites

A sharp drop in Parle’s biscuit sales means the company may have to slash production

Parle Products Pvt Ltd, a leading Indian biscuit maker, might lay off up to 10,000 workers as slowing economic growth and falling demand in the rural heartland could cause production cuts, a company executive said on Wednesday.

A downturn in Asia’s third-largest economy is denting sales of everything from cars to clothing, forcing companies to curtail production and raising hopes that the India government will unveil an economic stimulus to revive growth.

A sharp drop in Parle’s biscuit sales means the company may have to slash production, which may result in layoffs of 8,000-10,000 people, Mayank Shah, category head at Parle, said in a telephone interview from Mumbai. “The situation is so bad, that if the government doesn’t intervene immediately … we may be forced to eliminate these positions,” he said.

Parle, founded in 1929, employs about 100,000 people, including direct and contract workers across 10 company-owned facilities and 125 contract manufacturing plants. Shah said demand for popular Parle biscuit brands such as Parle-G had been worsening since India rolled out a nationwide goods and services tax (GST) in 2017, which imposed a higher levy on biscuits costing as low as Rs 5, or 7 cents a pack….