The big pay hike decided on by the government for the office of the president, vice-president and state governors is welcome news. With a pre-revision salary of a meagre Rs 50,000 a month, the President of India earned less than a senior executive at one of the top-end call centres. Even now, with a doubling of the paycheck for the country?s head of state, the office still earns less than a manager peddling soap in a Tier-II town for a multinational firm. But the hike is in line with a similar augmentation in the salary of members of Parliament, who now earn Rs 68,000 a month. The government has obviously decided to follow?albeit rather more modestly?the Singapore model where government functionaries are paid in line with salaries in the private sector. However, the real need is to overhaul the pay structures of public sector undertaking (PSU) bosses. The average pay for a PSU head is in the region of about Rs 6 lakh a year. This is not enough in the booming job sector of a resurgent India and neither is it commensurate with his/her responsibilities, which include managing financial outlays in the hundreds of crores of rupees. Private sector CEOs earn those sort of salaries in a month.
The discrepancy in pay between the government and private sector has lead to three chief issues. The first is that it leaves PSU bosses open to temptation and corrupt practices. Secondly, the best brains in the public sector can easily be lured to the private sector. This is a real and present danger for PSUs, with private firms in sectors ranging from realty to manufacturing?indeed, even start-up tech firms?now poach from the government with alacrity. Lastly, morale at the top is affected if PSU heads have to constantly worry about small change. There are, of course, counter arguments concerning pay hikes in the public sector?that government servants get subsidised accommodation, official cars and other related perks. They also come under far less scrutiny on performance compared to their private sector peers, who are answerable every quarter to shareholders. These are valid points. Perhaps the time has come to replace perks with pay in the public sector, thereby bringing about greater flexibility as well as transparency on how much is being spent from taxpayers? pockets for these mandarins.
