The recent debate regarding unacceptably high corporate salaries has been engaging as well as somewhat surprising. It is therefore important that the context be understood. The reactions in the media as well as amongst business circles were triggered by the phrase “vulgar salaries”. It is not a word of my choice or initiative. To be honest, it was used by a mediaperson to ask if I approved of vulgar salaries. How could I have said that I did? It would indeed have been my saying yes to the question if I had stopped beating my wife! In any case my answer was that we in India have not reached the level of liberalism to make vulgarity a fundamental right. How that sums up my entire view on corporate salaries is not for me to ask. But since I have views, as indeed should every thinking, responsible person, I shall state them explicitly.

The immediate reaction also seems influenced by the memory of the prime minister’s appeal, way back in 2007, to abjure conspicuous expenditure in a country like ours, still struggling valiantly to ensure inclusive growth. But from that to surmise that the government is in a mood to control salaries and more is wide off the mark. As some observers have said, the law at present puts a cap of 11 per cent of profits beyond which proposals have to come to the government for prior approval. Very few have noticed that the draft legislation forwarded to Parliament and under consideration of the Standing Committee does not have a cap. But of course, Parliament will take the final view. I also need no reminder that many of the huge salaries are drawn well within the cap and by persons whose contribution to the economic landscape is very impressive and indeed applauded by us. Voluntary restraints by them indeed deserve a warm round of applause. Yet the bottom line remains that there is a need to talk about these things as part of the corporate governance debate. Besides, not everyone against government control also accepts that some form of regulation is unwarranted. The discussions at G-20 and the pronouncements of President Obama on corporate “greed” are certainly stronger statements than words like “vulgar” and “indecent”; furthermore no one has yet repudiated the view that the Wall Street remuneration fiasco had something to do with the global recession.

... contd.