India's Consumption Remains Resilient Despite AI-led Job Losses: Prashant Jain

India's Blue-Collar Boom: A Growing Consumption Base

India's consumer base is expanding rapidly, driven by rising blue-collar incomes, according to Prashant Jain, a senior investment manager at 3P Investment Managers. Speaking at the Dezerv Wealth Summit in Bengaluru on May 13, Jain argued that the growth in blue-collar wages is offsetting the pressure from weaker white-collar wage growth.

India's broader consumption economy is not as vulnerable to job losses in the IT sector as some may think. With a population of 1.4 billion people, the country's IT services sector accounts for a relatively small share. Even if there were job losses in the sector, it would not have a significant impact on the overall economy. In contrast, India has 350 million households, highlighting the vast and growing consumer base.

Jain believes that the rapid rise in blue-collar wages is a structural positive, particularly because consumption growth increasingly depends on a broader base of earners rather than a narrow white-collar segment. He notes that in developed markets, service workers such as plumbers and electricians often command high incomes, and a similar shift is now visible in urban India.

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Comparison of Wage Growth in White-Collar and Blue-Collar Sectors

While weak real wage growth among salaried employees may have weighed on urban consumption trends in recent years, Jain said the impact is being offset by the sheer size of India's blue-collar workforce. Many blue-collar workers may now enjoy stronger effective purchasing power than white-collar employees because of lower lifestyle costs and higher savings rates.

Jain's comments come amid growing global concerns around AI-driven automation and the potential impact on white-collar employment, particularly in technology and outsourcing industries where India has historically been a major beneficiary. However, Jain's analysis suggests that India's broader consumption economy is more resilient than often thought, driven by the growing power of its blue-collar workforce.

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