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In a recent article, I had highlighted the key difference between India and many other major rich nations — excess household (HH) savings. Although the cumulative excess HH savings in the United States, the United Kingdom, Canada, Australia, Eurozone, and Japan amounted to 10-20 percent of income as of Q3CY21, it was -2.8 percent of income in India, and -2 percent of income in Indonesia (as of Q2CY21). This one divergence explains a large part of the likely different economic outcomes in India vis-à-vis advanced economies.

As a corollary to this evidence, it is also important to note that although personal disposable income (PDI, or household income) in most advanced nations has witnessed huge spurt since early CY20, it has remained weak in India. In short, the household financial position in India is weaker not only compared to the pre-COVID-19 trends, but also when compared to most rich nations. There is no official monthly/quarterly data on PDI in India, and the annual (first revised estimate) data comes with a lag of 10 months.

In order to bridge this gap, there are four indicators that one can analyse to understand the likely growth trends in PDI in India: rural agricultural and non-agricultural wages, salaries and wage bill of state governments, MGNREG wages, and employee costs of listed companies. The first three data indicators are available on a monthly basis, and the listed companies’ data is available on a quarterly basis. All data is available up to December, with data on MGNREGA wages available till up to January.

More than 70 percent of India’s workforce is engaged in the rural economy, and thus, rural wages published by the labour bureau on a monthly basis is probably the most comprehensive, and important indicators of PDI growth trends in the country. After declining 3.5 percent each in FY20, agricultural and non-agricultural rural wages grew 0.5 percent each in FY21. In the first nine months of FY22 (as of December ’21), while real agricultural wages grew by just 1.6 percent YoY, real non-agricultural rural wages declined 1.2 percent YoY during the period. According to the NABARD’s All India Rural Financial Inclusion Survey 2016-17, less than a quarter of rural household income was derived from the agricultural activity.

Further, state governments are a huge employer, with total employment estimated at about 200 million. Aggregate analysis of 22 states suggests that their salary and wage bill grew 11.2 percent YoY in 9MFY22, on a low base of 1.5 percent in FY21, implying an average growth of 6.3 percent in two years — compared to 11.1 percent average growth in the pre-COVID-19 period (FY18-FY20).

Besides, MGNREG was extremely useful in providing work to the population, who returned to their homes in the rural areas last year. Consequently, 112 million individuals worked under MGNREG in FY21, up more than 40 percent from 76-79 million in the pre-COVID-19 period. As of February 15, more than 99 million have worked under MGNREG. Nevertheless, the average daily wages per person increased by just 4 percent to Rs 209 in FY22 as compared to Rs 179 in FY19, implying an average nominal growth of just ~5 percent, similar to that in the pre-COVID-19 period. It also means that the real growth was negligible in MGNREG wages.

Finally, while rural wages and states are large employers, the wage levels in the listed companies are much higher. Employee cost of listed companies (~2,800 companies) increased by 13 percent YoY in 1HFY22, marking the highest growth in almost three years (Although the data is still flowing in, there appear to be similar growth in 3QFY22 as well).

Higher wage bill seems to be affecting two sectors in particular — IT companies and banks. These two sectors have performed extraordinarily during the past 18 months, and could be simply tagged the strongest at this time.

A company-wise analysis of 13 IT companies and seven banks reveals that while employee costs have risen ~20 percent YoY in 9MFY22 in both the sectors, almost the entire increase in IT companies and more than four-fifths of the increase in banks is due to higher employment, rather than higher wages. If so, this is somewhat similar to MGNREG programme where higher employment led to higher spending. It is, thus, misleading to attribute it to higher wage inflation (wage per employee) in India.

Overall, it is clear that there is no high wage growth in India, which is also in stark contrast to rich nations. Consequently, it is highly unlikely to witness demand-led inflation in India, unlike advanced economies, wherein massive fiscal stimulus made it exceptionally good for the household sector. Therefore, the policy responses will also be different in India vis-à-vis advanced nations.

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The family  of Delhi-based businessman Anant Agarwal has bought a bungalow in South Delhi’s West End area for Rs 82.5 crore, documents accessed by Zapkey.com showed.

The house is spread across an area of 1,009.88 square metres. The deal was registered on February 9, 2022, the documents showed.

There was no response from the businessman. The property has been bought in his mother's (Shobha Aggarwal) name.

Spike in deals

In Delhi, several bungalow transactions have been finalised of late in Delhi’s Lutyens Zone and other luxury markets such as West End and Vasant Vihar.

On February 2, a bungalow spread over 1,205 square metres (12,970 sq. feet) in the West End area was sold for Rs 91.5 crore, according to documents shared by Zapkey.com. The property was bought by Vikram Ahuja of Ahuja Radios, the documents showed. Ahuja did not respond to queries from Moneycontrol.

A property in Panchsheel Park, spread over 1,200 sq. yards, was sold to a Kolkata-based buyer for Rs 85 crore. Another property in Vasant Vihar was picked up by a local developer for about Rs 60 crore, while a bungalow with two units in Jor Bagh, located on a 600 sq. yard plot, was sold to two buyers for about Rs 28 crore each, local brokers said.

Last year, Anil Gupta, promoter of KEI Industries, a housing wire and cable maker, bought a property spread across 2,000 square yards in Delhi’s posh Shanti Niketan area for Rs 140 crore. The sale deed was executed on October 8, 2021.

In 2021, the owner of a leading electronics contract manufacturer bought a house in New Delhi’s Lutyens bungalow zone for Rs 170 crore, in what is believed to be the priciest residential transaction in the city after the lockdown. LBZ is located in central Delhi and consists mainly of buildings to house government offices and residences.

Soon after India’s biggest online-education startup Byju’s signed a deal to acquire tutorial chain Aakash Educational Services for $1 billion in April, the latter’s founder JC Chaudhary, bought a 2,000 square yard property in south Delhi’s Vasant Vihar area for over Rs 100 crore.

He later also purchased a 5-acre farmhouse in south Bijwasan area for around Rs 96 crore.

Preference for independent properties

“High Networth families are now preferring to purchase independent bungalows or plots in South Delhi compared to builder floors, as the former provides them independent ownership, privacy, and allows them control over construction timelines and quality. They are increasingly roping in credible architects to build to their specifications, rather than going with developers,” said Amit Goyal, CEO of India Sotheby’s International Realty.

Developers of high-value independent floors in some South Delhi markets have been avoiding registration under the RERA Act, leading to violations. The developers claim that they have been adhering to Section 3(2) (a) of RERA, which provides for exemption from registration if the land proposed to be developed is less than 500 sq. metres in size or less than eight apartments are proposed to be developed on the property.