India Insight

India’s richest man takes a pay cut

Mukesh Ambani has accepted a two-thirds cut in his salary in 2008/09 as chairman and managing director of Reliance Industries. His total compensation fell 66 percent to 150 million rupees.

The move comes just days after Corporate Affairs Minister Salman Khursheed warned firms against paying huge salaries to top company brass.

Ambani’s “desire to set a personal example of moderation in executive compensation” may be in line with the Congress government’s efforts to shore up public finances with an austerity drive of its own.

Excessive compensation has sparked outrage across the developed world after years of multi-million dollar bonuses paid out to executives, even at money-losing firms.

Politicians and policy makers have advocated curbs on these salaries, a theme echoed at the G20 meeting in September.

Will the Congress party’s austerity drive work?

When India’s ruling Congress party asked ministers and bureaucrats to cut down on needless expenses at a time of recession and deepening drought, many in the country had one question on their lips: will the austerity drive work?Rahul Gandhi tried to set an example by travelling by train as an ordinary passenger. His mother, Sonia, abandoned her private army plane and flew economy class on a commercial flight for a party rally in Mumbai.But there is still a great deal of scepticism among people. Some of the doubting was fuelled after the train Rahul was travelling in was pelted with stones. Experts said Rahul’s train trip was a security risk, which could cramp the austerity drive.But it’s not just the security concerns alone. The austerity drive also drew ridicule following a controversy over two senior government ministers staying in luxury hotel suites priced at $1,000 and $1,500 a night until their official residences were ready.Both ministers said they’d paid for their suites themselves, but stung by criticism amid the government’s austerity drive, they moved to more modest temporary homes.However, it was too late to change the mind of ordinary Indians who over years of Nehruvian socialism had begun to associate Congress politicians as leaders in simple hand-spun cotton, or khadi, clothes who drove around in old-fashioned Ambassador cars.Now, the question many are asking is: will the austerity drive last with election campaigns for Maharashtra and Haryana about to begin?True, with the economy in trouble, the government is making an effort with the finance ministry appealing for fewer overseas trips and smaller entourages as well as a ban on conferences in luxury hotels.But it isn’t easy: one minister protested he was “too tall” to fly economy while another said their positions demand they entertain in style.So, will the government’s austerity drive last? The opposition Bharatiya Janata Party (BJP) doesn’t think so. A BJP spokesman said it was just an “election gimmick” and they would go back to their usual ways once the state elections were over.Will they?

  •