Rise in executive pay belittles robust per capita income growth

India’s robust economic growth may have led to a sharp rise in per capita income in the recent years, but the earnings of the country’s top business executives has risen even more sharply.

As per an analysis of the income data provided by the government and the private sector, the country’s per capita income grew by 15.6 per cent in 2010-11, but the rise in top management remuneration of the listed companies during that fiscal was twice as much at over 36 per cent.

Increase in the overall employee costs of the listed companies was, however, much closer to the country’s per capita growth and rose by 18.6 per cent in 2010-11.

While some experts do not see any correlation in the per capita income and the salaries of the top executives and say it may not be proper to compare the two, a few others believe that the soaring managerial remuneration could be providing a boost to the country’s overall per-capita income levels.

The government data last week showed that the country’s per capita income cross Rs 50,000-mark for the first time, to Rs 53,331 a year, in 2010-11.

The average CEO or top-level management salaries in India are estimated at Rs 1-3 crore, although the remuneration levels vary based on the industry type, business size and  other parameters. The average salary would be much higher for top-paid executives. As per the salary data given by companies,  average salary of 25 top-paid Indian executives in 2010-11 stood at about Rs 33 crore.