Vulgar salaries; Innovation versus Regulation

TO WHAT EXTENT WILL YOU GET FATTER?


The fattening and getting monster in size the salaries of hundreds of CEOs across India has invited both national an 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. The statement of  Salman Khurshid, the minister for corporate affairs has ignited the debate across the nation as to whether there should be any regulation vis-à-vis vulgar salaries of CEOs in India or not. Only few moths back, Prime Minister Dr. Man Mohan Singh had also advised corporate world to rethink over ever increasing salaries and perks of the CEOs which, he lamented, widens the gulf between rich and poor and haves and have nots. PM was also disapproving the vulgar and gargantuan salaries in social and ethical perspective and said that this heightens the social tensions in the society because when people see this huge gap and wants to imitate the ostentatious life styles of ‘rich and famous’ over TV screens often get frustrated and tend to resort to violent and unlawful means.


HUGE GAP- the list appearing in public domain through media regarding top 10 highest paid salaries CEOs, suggests that the number has increased both in size and numbers. Persons like Mukesh Ambani who tops the list gets more than 44 crore( 440 million) as annual salary, whereas as Pawan Kant Munjal of hero Honda gets more than Rs/-150 million per annum. The list is being added by new debuts every year meaning thereby that more and more people of fat and vulgar salaries are being born in India. Many people may argue that what is wrong in it? Apparently nothing unethical and lamentable appears in this new corporate culture. China, the third largest and fasted growing economy in the globe which has celebrated its 60^th anniversary of its birth of communism with huge pomp and prowess, has also witnessed incredible 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 situation in our countries which is far from satisfaction. Our economy has also grown over a decade or so but at the same time and we too have occasions to celebrate, but we have created more deserts than oasis. More than 80% Indians do not spend even Rs/- 20 on them. Our country has still the stigma of having largest number of under nourished and mal nourished children. The health indicators and socio-economic indicators do not speak eulogy for us. The Human Development Index (HDI) launched by UNDP in 1990 has published its 2009 reports in which India slipped at 134^th position.  According to World Health Organization, about 49% of the World’s under weight children and 34% of the World’s stunted children and 46% of World’s wasted children live in India. On contrary to this, about 83, 000 Indians have liquid assets more than 1 Million dollars. There are millions of people who own more than 5 palatial buildings whereas there are hundreds of thousands of people who sleep under sky.
We have still hundreds of villages and towns which are not electrified and connected with good roads. We use mineral waters in cities whereas; people in many rural areas do not have access to safe drinking water. There are millions of homeless people and Indira Awas Yojna, a flagship scheme for providing homes to BPL families is still to provide even the minimum space required homes to all eligible BPL families. On the other hand there are people who spend 700 crore 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?  


INNOVATION versus REGULATION- Minister’s public utterance against the vulgar salaries of CEO’s has triggered a public debate and the society is vertically divided on this issue.   The people having views of no regulation on the salaries of CEOs suggests that any regulation from outside may be from government, would jeopardize the process of innovation in India. There shall be a brain drain if the salaries are put under a fixed ceiling, they warn. Some of the High Net worth Individuals (HNI) passes sarcastic remarks and say ‘you can keep monkey by paying grams’. But experiences in the past 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 (R&D). The inspiration of opening of economy and pursuing policies of Liberalization, privatization and globalization came from government side. The stimulus of innovations has been coming from regulations and not from de-regulation. In fact the de-regulation and excessive leverage in the financial system has given us worst ever global financial crisis and it is the regulation which is providing stimulus to turn it round. Even in USA, ‘efficient market hypothesis’ of Eugene Fama which later became of less regulation in the financial market of the world did not belong to any commercial or investment bank, rather Fama belonged to academia. Therefore the logic of this kind is rubbish and need not deserve hearing. 
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 it will further the dissent in our society and widen the gap between rich and poor. No society and economy 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.