Declining Share of Wages in Organised Indian Industry (1973-97):A Kaleckian Perspective

A declining wage-share in value added signifies a changing political economy of distribution, general weakening of the working class in the socio-economic system. It may even change the consumption profile of the economy and can slow down the growth of consumer demand. This paper studies the long run trend in the wage share in organised Indian industry for the period 1973-97 and tries the explain the decline in Kaleckian framework. The study notes that the wages share has declined by one fifth in the period on the whole. The fall is even rapid during the Liberalisation period. The proximate causes for the decline in share of wages are rise in raw materials-wage ratio and mark-ups. The paper, using the Kaleckian decomposition, estimates the relative strengths of the two factors in pre and post liberalisation periods.