There's a case for govt to interfere with 'vulgar salaries'

By hinting to regulate ‘vulgar’ salaries of CEOs, union minister for corporate affairs Salman Khursheed triggered off an old debate on corporate salaries. Mukesh Ambani has, however, listened to the advice by reducing his salary by 66 per cent.

It is obligatory for the government to regulate the salary structure of the corporate world as the expressway of privatisation, liberalisation and globalisation has left little space for the poor pedestrians. The gulf between the rich and the poor is widening both nationally and internationally. Today, 20 richest countries share as much as 86 per cent wealth of the world.

In India, the report of the committee on the unorganised sector headed by Arjun Sengupta, is a telling commentary on the yawning gap between affluent and the impoverished. If 77 per cent people of the country survive on a paltry income of Rs 20 or less per day, how can we be proud of the growing number of billionaires?

Disparities in incomes of individuals are growing with a breakneck speed as private sectors are offering astronomical pay to their CEOs and other topnotch officials, and there is no ratio between the highest paid and the lowest paid. If not checked, this trend may tear the society apart. Salary structures in the private sector need to be rationalised.

However, it must be remembered that vulgar salaries were introduced by the British government in India, and not in its own country, and the ‘swadeshi’ government could not dismantle that legacy. Since the British came to rule over India, they introduced a flabby administration in which doing job was a luxury.

The Regulating Act of 1773 created a Supreme Council in Bengal comprising a Governor-General and four councillors. Exorbitant salaries were attached to these posts, the Governor-General receiving 25,000 pounds a year while Councillors were paid 10,000 pounds each. It was repulsive, to say the least, in a poor country like India.

No wonder, Mahatma Gandhi, in a letter to Viceroy Lord Irwin, dated March 2, 1930, wrote that he held the British rule to be a curse which had impoverished the dumb millions by a system of progressive exploitation and by a ruinously expensive military and civil administration. Then he wrote about the inequality in income, “Take your own salary. It is over Rs 21,000 per month, besides many other indirect additions. The British prime minister gets 5,000 pounds per year, ie, over Rs 5,400 per month at the present rate of exchange. You are getting Rs 700 per day against India’s average income of less than annas 2 per day. Thus you are getting much over five thousand times India’s average income.”

However, our own government did not emulate Gandhi which is evident from recommendations of the Central Sixth Pay Commission, which reinforce the invidious caste system in the government service. Certain categories of government employees have been severely discriminated against. By introducing the system of four Pay Bands with 20 grades, the government has legitimised the concept of inequality.

The government must make endeavours to reduce disparity and raise per capita income for inclusive growth which the government keeps talking about. Per capita income is misleading when the disparity is so horrendous. Raising the per capita income was foremost on the agenda of our national leaders from the pre-independence days. Planning occupied the centre stage of Indian thinking as the Second World War neared its end.

A Plan of Economic Development for India, prepared by a body of distinguished industrialists, was published in 1944. More popularly known as Bombay Plan, it envisaged an investment of Rs 10,000 crore spread in three successive five-year stages. It said that only through heavy investment in the economy and through a concerted drive to raise the living standard of the people could the challenge of the appalling backwardness of the country, the indigence and illiteracy of its people and the high mortality rate be combated.

They estimated that a per capita income of Rs 74 at pre-war prices was essential to secure a minimum standard of living. It was a modest goal and yet it was so arduous, for the per capita income in British India at the time was Rs 65. A comparison of this figure with that of other countries in the same period throws adequate light on our condition then: USA Rs 1,406, Canada Rs 1,038, UK Rs 980 and Australia Rs 792.

In the political arena, we have adopted democracy which is based on the concept of equality and which befuddled Toqueville how equals were ruling over equals, but in the economic field there is concentration of wealth. Inequality in assets leads to inequality in income, which is further aggravated by the arbitrary salary structures, and it finally leads to inequality in consumption which shapes our lifestyle.