Ceiling needed for CEO salaries in India
A few months back, Prime Minister Dr. Manmohan Singh had also advised the corporate world to rethink over the ever increasing salaries and perks of CEOs which, he lamented, widened the gulf between the rich and poor and have and have nots.
THE HUGE salaries of hundreds of CEOs across India, has invited both national and international media attention. The growing number of persons in the list annually published by Forbes Magazine has also invited attention of both common man and politicians in this country. This high figure corporate culture is present not only in India. China, the third largest growing economy in the globe, which has celebrated its 60th anniversary recently, has also witnessed an increase in numbers of HNIs and the number of millionaires here has gone up to unbelievable 8,25,000. The Chinese economy grew by 67 times since 1979, the year when Deng Xiaoping took over the rein of this Asian dragon. But, this does not justify the situation in our countries which is far from satisfaction. Our economy has also grown over a decade or so but, we have created more deserts than oasis. More than 80 per cent Indians cannot spend even Rs 20 on them. Our country still has the stigma of having the largest number of malnourished children. The health indicators and socio-economic indicators are also not good. The Human Development Index (HDI) launched by UNDP in 1990 has published its 2009 reports in which India slipped to 134th position. According to WHO, about 49 per cent of the World’s underweight children and 34 per cent of its stunted children live in India. Contrary to this, about 83, 000 Indians have liquid assets more than $1 million. There are millions of people who own more than five palatial buildings whereas there are hundreds of thousands of people who sleep under sky. Hundreds of villages and towns here are still not electrified and connected with good roads. We use mineral water in cities whereas, people in rural areas do not have access to safe drinking water. There are millions of homeless people and Indira Awas Yojna, a scheme for providing homes to BPL families, cannot still provide even the minimum space for the required homes to all eligible BPL families. On the other hand, there are people who spend 700 crores on one building to live in. What a dichotomy and contrast indeed! Under this backdrop, how can India afford such vulgar salaries to some of the CEOs? Khurshid's statement on these salaries, which triggered this debate, has divided the society vertically on this issue. There are people who claim that no regulation on the salaries of CEOs suggests that any regulation from outside may be from government and would jeopardise the process of innovation. They state that a brain drain would begin, if a ceiling is put on these high salaries. Some of the High Net worth Individuals (HNI) pass sarcastic remarks and say ‘you can keep monkey by paying grams’. But experiences reveal another story. In India, for example, all innovations and inventions have come from government aided or owned laboratories or from public sectors. Privates sectors do not simply bother to invest in Research and Development. The inspiration for Liberalisation, privatisation and globalisation came from government side. The stimulus of innovations has been coming from regulations and not from de-regulation. In fact, de-regulation and excessive leverage in the financial system has given us the current financial crisis and it is the regulation which is providing stimulus to turn it round. The government must come up with a comprehensive legislation with respect to providing a ceiling on the ever growing size of salaries of the CEOs otherwise, this will create dissent in our society and widen the gap between rich and poor. It is surprising that when a company is technically owned by share holders, why are they not taken into confidence to fix or to enhance salaries of CEOs and other employees. The legislation can deliberate upon this issue and make provisions so that, consent of share holders is made mandatory and the uneven vertical growth of salaries are curbed and regulated. No society can thrive and grow under such dichotomy and contradictions. Amartya Sen has rightly said that growth without democratic distribution brings no prosperity in the country. Even the ongoing financial crisis and global recession has been caused due to ‘privatising profits and socialising losses’ and if we want to create sustainable social and economic order, we will have to distribute the profits also and not only losses.
.it is very disgusting and unfortunate that where hundreds of thousands of common people live in abject poverty, ministers and CEOs live in spectacular world of effluence and affluence
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