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.
Ambani’s revised pay package is a far cry from the 440 million rupees he got last year but the salary cut is not seen as making too much of a dent in his wallet.
Earlier this year, Forbes magazine pegged Ambani’s worth at about $19.5 billion in its list of the world’s billionaires.
At least one corporate czar seems to have been of the same mind as Company affaires minister Salman Khursheed’s call of austerity in corporate salaries.
The prime minister though when asked recently about his observations made along similar lines said that he had just made a general observation and there was no proposal before the government as such.
So is that a good move?
In economics what is good for the individual may not be good for the whole. As Keynes explained if everyone starts being thrifty it may make the economy spiral downwards.
So if everyone follows Mukesh Ambani could it be good for the economy and society?
On the other hand is the argument that conspicuous consumption in an underdeveloped country encourages wasteful expenditure which should be used instead in asset building.
The proof of the pudding would be not how much Ambani has cut down but where.