India Inc has heaved a sigh of relief after Prime Minister Manmohan Singh on Sunday ruled out the government interference in fixing remunerations for private sector corporate chiefs.
Earlier, Corporate Affairs Minister Salman Khurshid had advised companies to refrain from offering “vulgar” salaries to CEOs amid rising austerity drive by the government.
Amit Mitra, secretary general, Ficci said, “Prime Minister Manmohan Singh has clarified the government’s position and the issue which are consistent with the current rules and norms.”
While the Associated Chambers of Commerce and Industry of India (ASSOCHAM) favoured adoption of austerity measures by corporate sector at current time of crisis, it also underlined that market forces were key in determining salaries of corporate honchos. “We support austerity measures and several heads of corporate houses have already taken pay cuts,” Swati Piramal, director, Piramal Healthcare who recently took over as president of Assocham said.
In a quick survey conducted by the industry body, about 80 per cent of CEOs said corporate India needed to adopt austerity measures as it was the need of the hour.
The government has recently embarked on a major austerity drive banning air travel on business or first class by officials. It has also banned holding of meetings and conferences at five star hotels.
Even in the United States, President Barack Obama in February, had put a $5,00,000 (Rs 2.4 crore) limit on annual pay of bank executives whose firms receive government assistance during the crisis.
In May 2007, the Prime Minister too in his address to corporate captains had asked companies to “resist excessive remuneration to promoters and senior executives and discourage conspicuous consumption.”