Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial

Government double standards: Reduce CEO pay, but we'll keep our bungalows


A government dictat, or the threat of it, does not rile me much anymore; especially when the Congress government rules. Oh well, any government, but they’ve had the biggest chunk of time in power. Still, once in a while, their spokespersons make statements that are simply intolerable because they reek of double standards.

Salman Khursheed is our Minister of State for Corporate Affairs. (which, incidentally, does not involve snooping into whether Bharti went to bed with Vodafone, though that might be a better use of his time). He went on the rampage against “vulgar” salaries being paid by the private sector to their CEOs, saying that he could “hardly shut his eyes on what salary CEOs are going to take”. We can be liberal, he said, but not vulgar, referring perhaps to the fact that some people other than politicians have actually made some money and worked hard, which must be anathema to the Congress Party.

This stinks. The government spends an obscene amount of money in Delhi just propping up people like Khursheed. He stays, supposedly, at 2, Motilal Nehru Place,New Delhi-110011 which is in the heart of Lutyen’s Delhi. That house is probably worth 50 crores now, but let’s just take the rental value – about Rs. 10 lakhs per month? Why not give it up, and go live in a house in Delhi that he OWNS, if he wants to be austere? Why foist his austerity on us, when it was his government’s stupid policy of forgiving farmer loans, overpaying fertilizer subsidies and running obscene oil subsidy bills?

That 10 lakhs a month adds up to a fair bit, one would think, for a person whose primary role seems to be to keep making silly statements. But it doesn’t end there. We, the tax payers, pay for their servants, their transport, their security, their phone bills and of course the few crores they spend when they scream and rant and adjourn parliament because they want to do su-su.

Choices: a) we spend our money, or b) they spend our money. That decision, to me, is very easy.

Khursheed warns against being ostentatious. Oh yes, having FOUR cars is not very austentatious; his wife and him own a Scorpio, a Gypsy, a Jeep and an Innova. He owns a flat in Delhi and 11 acres in Farrukhabad, UP. Khursheed’s has declared 75 lakhs in FDs in only his name. And this is just the declared assets; which we must believe is all he has, otherwise we are vulgar.

CEO pay has been debated in a lot of countries; the latest is to limit bonuses and make them more in line with real profits (not ones invented out of thin air). That is perfectly understandable. But to limit salaries in what is a real profit making enterprise is overreaching and unnecessary; after all such salaries involve payment of tax to the government (rather than keeping them in a zero-tax SEZ or something), and then the money is spent so the money trickles down to those who don’t have it.

When a company like Reliance, which makes a NET profit of over 15,000 cr. per annum, pays its CEO a salary, including perks, of Rs. 44 cr. , it is hardly “vulgar”. But to understand that will require the application of logic, and I must beat myself with a stick for expecting too much of our politicians.

I say spend it. We’ve saved way too much. They’re going to debase our currency anyway through inflation. Setting limits on CEO salaries is going to be a waste of time – they will find a way around it anyhow. Better, perhaps, to ask them to spend as much and more; some of that money will find its way to the poor, and some of it, FSM forbid, into government coffers as well.

Too much ranting. Sorry.


Like our content? Join Capitalmind Premium.

  • Equity, fixed income, macro and personal finance research
  • Model equity and fixed-income portfolios
  • Exclusive apps, tutorials, and member community
Subscribe Now Or start with a free-trial