A STUDY OF WAGE STRUCTURE AND INTEREST RATES IN INDIA

The economy has been compartmentalized with modest consumption goods and luxurious consumption goods and by chance, it has been happening in the division between wage earners and salaried earners. Since the wages in the private sector tend to be rigid the internal rate of return is dependent on the interest rates. In developed countries the interest rates continue to be on the soft side for the reason that wages are inflation-adjusted and hence increase in interest rates are nominal but when the economy is on the downward swing the interest rates are also softened accordingly. There is a greater tendency of entering into service sector which demands no strict education and where the wages are also non-competitive. The telecommunication and foreign brands are high paying sectors and hence the wage growth is faster. As the market is fragmenting in many layers the production and wages are adjusting according to the market. All sorts of firms and small industries are needed by the various strata because to match their demand and expected prices. The low wages alone are responsible for pulling back the economy in the trap. What is needed is that agricultural productivity is being ramped up on the most priority basis so that industrial push can drag the workers which would begin to be skilled.