Paranjoy Guha Thakurta
While India has always been seen as a land of great socio-economic disparities, of slums co-existing 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, late May, of the Confederation of Indian Industry (CII), an association representing many of the country’s most powerful business groups, Singh 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 last five years and an annual survey conducted by Hewitt Associates in March predicted that this year the average rise would be around 14.5 percent - 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 U.S.-based manpower consultants said Indian salaries were bound eventually to match those in affluent Asian countries like Japan and Singapore.
Singh, a former World Bank economist, based his observations on an economy which has averaged an impressive 8.5 percent 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 Singh’s homilies have since been attacked by critics on the right as well as the left. A section of industrialists wondered if the centre-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 sceptical 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 party, stated that “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 realised, 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, Singh’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 carries the lifestyles of the rich and famous into every village and every slum. Media often highlights 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.”
Singh urged industrialists to be more generous towards 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 businesspersons to “desist from non-competitive behaviour” and sarcastically added: “Even profit maximisation should be within the bounds of decency and greed!”
Asking the wealthy to become more generous, Singh 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 compensations, I know that you have benefited from the growth processàYour 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 realise its wider social responsibility. The time has come for the better off sections of our society -- not just in organised 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 (who heads India’s largest privately-owned telecommunications conglomerate) said Singh’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 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 sarcastically remarked.
One out of four Indians lives on less than one US dollar a day and nearly two-thirds of the country’s billion-plus population live on barely two dollars 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 late last year, asset inequality is more marked in India than in China. The top half of the Indian population held 92 percent of the country’s total wealth against 86 percent in China; the bottom half held 8 percent of total national wealth in India against 14 percent 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.
Source: Inter Press Service
