A broadside at overpaid
Indians By Paranjoy Guha
Thakurta
NEW DELHI - While India has
always been seen as a land of great socioeconomic
disparities, of slums coexisting with marble
palaces, there is new concern at the rapid pace at
which the rich-poor gap is widening.
And no less a man than Prime Minister Manmohan
Singh, widely hailed as the architect of economic
reforms in the world's second-most-populous country, has
set in motion a debate on lavish salaries and
unconscionable spending.
Addressing a
meeting in late May of the Confederation of Indian
Industry (CII), an
association representing many of the country's
most powerful business groups, Manmohan called for
members to "resist excessive remuneration to
promoters and senior executives and discourage
conspicuous consumption".
India's once
notoriously low paychecks have been climbing over
the past five years and an annual survey conducted
by Hewitt Associates in March predicted that this
year the average rise would be around 14.5% - the
highest climb in the Asia-Pacific region.
Basing its analysis on a survey of 1,500
companies in the region, 580 of them in India, the
US-based manpower consultants said Indian salaries
were bound to eventually match those in affluent
Asian countries like Japan and Singapore.
Manmohan, a former World Bank economist,
based his observations on an economy that has
averaged an impressive 8.5% growth in the past
five years, reflected in leaping corporate
salaries with chief executives of major Indian
corporations already drawing salaries similar to
their counterparts in developed countries.
But Manmohan's homilies have since been
attacked by critics on the right as well as the
left. A section of industrialists wondered if the
center-left United Progressive Alliance that he
leads wants to return to the "bad old" socialist
days when the government would mandate ceilings on
company remunerations.
The communists, who
provide crucial outside support to the federal
government, were also skeptical of the prime
minister's appeal to industry to work for a more
equitable society.
An editorial in a
publication of the Communist Party of India
(Marxist), the largest left-wing party, stated:
"All appeals to a change of heart [on the part of
industry] is not only meaningless but is empty
rhetoric." It added: "If the prime minister's
declared objectives are to be realized, then what
is required is a change of course in economic
policies: the abandonment of the neo-liberal
policy framework and a shift in the focus of
economic policies from being solely preoccupied
with corporate profits towards improving people's
welfare ..."
Yet Manmohan's warning
carried wisdom. "In a country with extreme
poverty, industry needs to be moderate in the
emoluments levels it adopts. Rising income and
wealth inequalities, if not matched by a
corresponding rise of incomes across the nation,
can lead to social unrest.
"The electronic
media carry the lifestyles of the rich and famous
into every village and every slum. Media often
highlight the vulgar display of their wealth. An
area of great concern is the level of ostentatious
expenditure on weddings and other family events.
Such vulgarity insults the poverty of the less
privileged, it is socially wasteful and it plants
seeds of resentment in the minds of the
have-nots."
Manmohan urged industrialists to
be more generous toward the downtrodden, not to
define corporate social responsibility by tax planning
strategies, to fight corruption and create
job opportunities for the disadvantaged sections
of India's unequal, deeply divided and
hierarchical society.
He further asked
people in business to "desist from non-competitive
behavior" and sarcastically added: "Even profit
maximization should be within the bounds of
decency and greed." Asking the wealthy to
become more generous, Manmohan exhorted: "When I
read about the growing number of Indian
millionaires and billionaires, about Indian
companies buying up multinationals abroad, about
our clogged airports, about the real estate boom,
about new holiday destinations, about soaring CEO
[chief executive officer] compensations, I know
that you have benefited from the growth process.
"Your businesses have to be globally
competitive. However, even to win this race, you
must work in a harmonious environment, an
environment in which all citizens feel equally
involved in processes of economic growth; an
environment in which each citizen sees hope for a
better future for him and for his or her
children.
"In a modern, democratic
society, business must realize its wider social
responsibility. The time has come for the better
off sections of our society - not just in
organized industry but in all walks of life - to
understand the need to make our growth process
more inclusive; to eschew conspicuous consumption;
to save more and waste less; to care for those who
are less privileged and less well off; to be role
models of probity, moderation and charity."
CII
president Sunil Mittal (head of India's
largest privately owned telecommunications
conglomerate) said Manmohan's remarks were akin to
a father's advice to his son and said his
suggestions should be taken in the "right spirit".
He was, however, quick to add that corporate
remuneration and business profitability should not
be limited. He said Indian firms were finding it
tough to retain top talent despite shelling out
handsome salaries and perquisites. Management consultant
Mrityunjay B Athreya told Inter Press Service
(IPS) in an interview: "The prime minister
has raised a serious issue in a fair, mature and
wise manner. He has not threatened legislation but
cautioned industry that widening inequalities
would not only result in a social backlash but
could threaten India's democratic society itself."
Athreya pointed out that growing economic
disparities have spurred movements by violent
Maoist groups that are active in at least seven
Indian provinces. "I believe the prime minister
was not speaking from a political or an
ideological perspective but reacting in a manner
any sensitive citizen would," he contended.
Prabir Purkayastha, a left-leaning
analyst, has a different point of view. "It is
contradictory for a prime minister whose
government's policies encourage consumerism and
speculation to turn around and say greed should be
controlled," he told IPS. He added that the rich
in India would not become generous by exhortations
alone. "We need a set of policies and regulations
that discourage conspicuous consumption and
encourage productive investments."
Purkayastha was of the view that
"government policies have to nudge people not
goodness-of-heart kind of appeals". "You can't
reduce taxes on luxury goods and free their
imports and then tell people not to consume
these," Purkayastha remarked.
One out of
four Indians lives on less than US$1 a day and
nearly two-thirds of the country's billion-plus
population live on barely $2 a day. The rich, on
the other hand, boast of lifestyles that are
comparable to those of the most affluent anywhere
in the world. Even in Indian cities that glitter,
a third of the citizens live in abject poverty,
denied secure jobs, social security and access to
basic sanitation facilities and clean drinking
water.
According to a study conducted by
the United Nations University and released last
year, asset inequality is more marked in India
than in China. The top half of the Indian
population held 92% of the country's total wealth
against 86% in China; the bottom half held 8% of
total national wealth in India against 14% in
China.
The Indian government's critics
argue that the political leadership and the
bureaucracy should first get their act together
before lecturing others. It is an open secret that
much of the money spent by the government on
development schemes gets diverted by corrupt
officials and subsidies meant for the poor do not
reach those who need them the most.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
