My view on austerity as a principle for any country is curbing wasteful expenditure. The debate on high CEOs salaries is uncalled for as it is decided by the shareholders. I don’t think the government can dictate terms to corporates in this matter.
We are getting a little too carried away by the newfound penchant for austerity. If the government cannot pay as well as the private sector it does not mean they can have a say in determining salaries of CEOs. It should first go on an austerity drive before pointing fingers at us. Moreover, austerity should be across the board and not just limited to payouts.
All companies have been moderate in terms of increments this year. If you look at the hikes given so far, it is all subdued and CEOs are drawing reasonable salaries. If at all there are incentives attached, it will be determined by the market forces and shareholders. government shouldn’t be regulating salaries.
The whole austerity issue is a confused one. On the one hand we say India is not affected by recession, on the other we are contradicting it. We first have to make up our mind about this.
The government should do a little bit of introspection on its austerity drive. We are merely looking at cosmetic factors of austerity. I understand that we have a large section of the population that is economically deprived. The problem cannot be solved by austerity, but by inclusive growth. For instance, look at the way we are spending on infrastructure without doing anything concrete. We can develop good infrastructure at low cost. Is it happening? We have to look at deeper aspects of austerity especially issues that have not been addressed so far.
I think it is a matter of market forces at play in the corporate sector. If we don’t take care of talent retaining it will be very difficult. Therefore one should leave it to supply-demand factors to take care of it.
As told to Shilpa Phadnis
