₹75,000 crore consumption boost coming? What SBI report said about new labour codes

India’s newly implemented labour codes could lift household consumption by around ₹75,000 crore over the medium term as workers are expected to have an additional ₹66 per day to spend, according to an SBI Research report released on Tuesday.

The report stated that the consumption boost will stem from higher disposable income as the Codes on Wages mandate minimum pay for all eligible workers.

The current minimum wage rate in India is ₹546 per capita per day, which includes the average wage across all categories and areas of workers.

“This would imply that disposable income of workers on an average may rise by ₹95 per day post implementation of labour codes,” it said.

Assuming a 30% savings rate, the remaining amount would flow into consumption, according to the report.

The labour codes replace legislation dating back to the pre-Independence and early post-Independence era, which the government said had become fragmented, complex and inconsistent with current forms of work.

The measures introduce mandatory written appointment letters for all workers, universal minimum wages, timely wage payments and an expanded definition of employees eligible for social security benefits such as provident fund, pensions, insurance and Employees’ State Insurance Corporation (ESIC) coverage.

Gig and platform workers, covered for the first time in India’s labour framework, will receive social-security benefits funded partly through contributions of 1%–2% of an aggregator’s annual turnover, capped at 5% of payments made to such workers.

The new provisions widen ESIC coverage across India and make the scheme mandatory for even a single worker in hazardous industries. Establishments with fewer than 10 workers may join voluntarily.

The codes also streamline employer compliance through single registration, a national licence and a single return.

SBI Research estimates that the overhaul could accelerate formalisation in the labour market, pushing the share of formal workers from 60.4% to 75.5%.

With nearly 44 crore people currently employed in the unorganised sector, the transition of even 20% of informal workers to formal payrolls could benefit roughly 10 crore individuals, it said.

Social security coverage could rise to 80–85% over the next two to three years, up from 64.3% in 2025.

The report projects up to 77 lakh additional jobs over the medium term as compliance burdens fall and organised hiring expands.

India’s unemployment rate could decline by 0.3–1.3%, depending on implementation speed and state-level rules, it added.

While the report said the reforms will make the workforce more protected and productive, it cautioned that take-home salaries for some employees may decline as contributions toward retirement benefits rise under the new wage structure, which requires basic pay to constitute at least 50% of total compensation.

For employers, operational costs may increase initially, but rationalisation of compliance is expected to lower long-term administrative burdens and support business expansion, the report noted.

Calling the reform “a major step toward a resilient and self-reliant labour market”, SBI Research said the changes align India’s employment framework with global standards and support the country’s long-term growth objectives, including its ambition to become a developed economy by 2047.