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Vulgar salaries; Innovation versus

Regulation
The vulgar salaries of CEOs of some
companies have attracted society‘s
attention. The government is also
considering bringing a legislation to
regulate the enhancement of salaries
of CEOS .
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

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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

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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 60th 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

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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 134th
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.

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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

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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
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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.
It is very surprising that when a company
is technically owned by share holders, why
then they are not taken into confidence
and concurrence to fix or to enhance
salaries of CEOs and other employees of
these companies. The legislation can
deliberate upon this issue and make
provisions so that consent of share holders
is made mandatory so that the uneven

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vertical growth of salaries of CEOs are
curbed and regulated.
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, after all the ongoing financial
crisis and global recession has been
caused due to ‘privatizing profits and
socializing losses’ and if we want to
create sustainable social and economic
order, we will have to distribute the profits
also and not only losses.