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Business Commentary/Ashok Mitra

Rich man, poor man

Spokesmen of the Indian Institutes of Management strewn across the country -- Ahmedabad, Calcutta, Bangalore, Lucknow, et al -- have gone to town, and for reasons to be presently disclosed.

These institutes were set up over the past four decades with the objective of lifting the level of efficiency of Indian managers. Whether the efficiency of executive cadres has in fact gone up as a consequence of superior managerial education is a matter of debate; the criteria by which to assess the secular trend of efficiency are not at all clear-cut.

That does not however hinder discussion on the allegedly poor performance on the part of inferior level employees. Superior grade managers are, by definition, taken to be impeccable geniuses. Others may abide the question, senior managers, such as those groomed by the institutes of management, are free. For poor wage earners, on the other hand, the regimen is overly strict.

Globalisation has also wrought one wondrous transformation. Efficiency has nothing to do with it, it is exclusively on account of emoluments that the level of earnings of the senior managerial staff has jumped 15, 20, 30, in some instance even a hundred, times compared to what it was a decade ago.

The statutory ceiling on salaries prevalent in the country during the post-Independence years has been given the go-by. Foreign firms are briskly picking recruits to man their freshly opened outposts in the country. Given the huge profits they are squeezing out of the Indian economy, payment of emoluments to the select staff on a global scale hardly causes them problems.

Spokesman of the institutes of management are therefore having a field day of late: what a grand phenomenon, the labour market could not be more generous; some of their graduates, barely 24 or 25 years of age, have landed jobs fetching a salary of close to Rs 5 million annually, or more than Rs 450,000 per month.

Nearly ten thousand individuals in the country, a quick count suggests, are receiving emoluments in this range. Please do not be shocked. Compared to American salary levels, what these Indian executives are being paid is not at all outrageous. Globalisation is as globalisation does.

These would appear to be scandalous only if average payments to the overwhelming sections of the Indian working class are taken into consideration. The latest Pay Commission has recommended an increase of roughly 20 per cent across-the-board in government salaries.

That official body, the Central Statistical Organisation, has these days chosen to cross over from pure data gathering to social preaching as well. One part of the reason for the hefty increase in the relative proportion of income from the service sector in gross domestic product in the course of the past decade, it has commented, is the scale of improvement in government emoluments. The CSO has scrupulously stayed away from mentioning though that the rate of increase in earnings from service activities in the private sector has been several times higher. The idea of the ruling classes becomes the ruling idea of the epoch; it has certainly turned out to be so for our official statistical agency.

The written media and those others who matter in the world of communication are equally partisan, and equally reticent. There is at least no evidence of surprise or consternation in the pages of newspapers or in discussions in political circles, including in Parliament, over the datum that, in this poor country where nearly 30 per cent of the population cannot even afford the calorie intake needed for bare subsistence, some organisations have the temerity to offer their fresh recruits as much as Rs 4.5 million as annual salary.

Replying to the debate on the President's address in Parliament, the prime minister went into raptures over the supposedly magnificent achievements in the country's agricultural front in recent times. The granaries, he was ecstatic, are overfull and the government is in a predicament over the rising level of foodstocks lying with the Food Corporation of India.

Should not the prime minister be a shade better informed? Stocks of foodgrains are not being offloaded from the public distribution system because the prices at which these grains are offered for sale to the nation's poor are much too high at the given level of their earnings.

The majority of the Indian consumers, who mostly comprise small peasants and landless workers, are, let us have the honesty to admit, being priced out of the foodgrains market. The enactment of this great human tragedy misses the satellite channels just as it misses the hi-tech daily newspapers.

At one end, immense pressure emanates from the World Trade Organisation and other lobbies, foreign and domestic, to globalise farm prices, including grains prices; these prices accordingly zoom. At the other end though, for the overwhelming majority of the nation, income is pegged at where it was a decade ago.

There is officially sanctified statistics to back up the point just made. The crucial information the latest Economic Survey has let us on, however elliptically, is with respect to the overall rate of growth of farm output in the country. This growth rate has, in the course of the Nineties, just kept pace with the rate of growth of population. Which is another way of saying that the per capita availability of agricultural output, including that of foodgrains, has remained stagnant since the initiation of the great economic reforms.

That respectable Bombay-based research body, the Centre for Monitoring Indian Economy, has gone on record expressing some scepticism about the official data on growth rates. According to it, government agencies have overestimated growth in the farm sector that has taken place between the early Nineties and now.

Should the CMIE presumption be correct, per capita growth in farm -- and foodgrain -- output must have actually lagged behind the rate of growth in population since 1991. Per capita availability of foodgrains, in other words, has shrunk since the beginning of the liberalisation spree.

Another conclusion is also derivable from the same data. Roughly two-thirds of the Indian population continue to draw their livelihood from the farm sector. This was the situation five decades ago; it remains so even today. As vouchsafed again by official statistics, there has been no relative displacement of workers away from agriculture in the course of the past decade.

With per capita income in agriculture at best remaining stagnant, two-thirds of the Indian population have experienced no increase in real earnings since reforms began.

However, over the same period, the level of service incomes has jumped 15, 20, or a hundred times; young graduates from the IIMs have come to enjoy a salary level of roughly Rs 5 million a year as against the per capita income level of barely Rs 5,000 or thereabouts for 60 per cent of the country's population.

If the arithmetic is right, the income differential works out to 1:1,000.

We can allow ourselves to proceed a bit further. It would be altogether surprising if, in the course of this past decade, income distribution within agriculture has not got further tilted in favour of the top 10 to 15 per cent of the agrarian community. After all, no worthwhile land reforms have taken place in this period and most of the advantages accruing from the availability of water, fertilizer and high-yielding varieties of seeds have gone to rich peasantry and landlord classes.

Such being the case, the small holders, share croppers and landless workers, who make up the preponderant sections of the Indian population, must have experienced a decline in their per capita real income in the course of the Nineties. This at a time when those in the upper income brackets, particularly those in the services sector, have enjoyed real income growth of an astronomical order.

Such facts are not supposed to be mentioned in the etherised, culturally refined, globalised ambience of post-reforms society. The pig-headed ones who nonetheless venture to raise these issues are ostracised and their voices stilled.

But a doubt persists. Can the upper classes who are ruling the roost be at all confident that despite the system they have ushered in being against nature and against rationality, it would be sustainable for any length of time? It is a bizarre situation. The landless cultivator earns at most Rs 5,000 annually while the young IIM graduate is paid Rs 5 million. Does it mean that the latter is one thousand times more efficient than the poor Indian peasant?

Suppose the multinational company which employs the IIM graduate decides to raise his annual emoluments overnight from Rs 5 million to Rs 10 million, does it then mean that, instead of being a thousand times more efficient than the wretched peasant, he has become, overnight, two thousand times more efficient than the rustic fellow?

Ashok Mitra

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