While MPs fail the austerity test, Salman Khursheed, corporate affairs minister, tells Tusha Mittal how he’ll get corporate India to listen
What triggered your statement on corporate salaries?
This debate started with PTI correspondents asking me what I thought of vulgar salaries. I said vulgarity is not a fundamental right. It was taken out of context. I was talking about a larger debate on corporate governance.
The problem is that the constituency you are talking to – corporate India – is not obliged to listen to you? Will there be a law to enforce better corporate practices?
We are bringing in a new law; it will respect the relationship between the corporates and the government, but have certain expectations. For instance, after the Satyam scandal, to say we will not discuss independent directors is not acceptable. We’ll try to come to the widest possible consensus and give it a statutory backing. There will be some things that the law requires, and others will come under good practices.
What will fall within the purview of this law?
I don’t want to foreclose this. The CII is working on a corporate governance code. Right now, we’re leaving it fairly open.
At present, the Companies Act allows corporates to draw salaries up to 11 percent of net profits. But your ministry has drafted a bill removing this cap. Doesn’t this contradict your views on vulgar corporate salaries?
My point is, are people happy with this kind of control? Let’s talk about who can regulate it. Is it best to leave it to the discretion of somebody in the ministry? We are willing to say that this kind of discretionary power to the ministry is not welcome. Instead of screaming, they [corporate India] should be thanking me for wanting to give away this power. The bill was drafted two years ago and couldn’t be passed because Parliament was dissolved. Since then, many things in India and the world have triggered a larger debate about corporate governance and the issue of remuneration. We are discussing a package of reforms with the industry.
‘There is nothing wrong with being rich, but the shareholders should decide corporate salaries’
Do you want the law to regulate corporate salaries?
I cannot say yes or no. We need to understand what is an appropriate salary, and whether that is something external people can decide or if only shareholders should decide. I have already sent a legislation to Parliament where I’ve said shareholders must decide. But the debate is not whether the government or somebody else will control salaries. The big question should really be if the shareholders are powerful enough, or if we need to make their voice more effective. There is nothing wrong with being rich, but it is the shareholders money that makes you rich. So the shareholders have a right to know whether their money is safe.
Let alone corporate India, the government can’t enforce austerity among its own MPs. They are booking seats in the economy class and upgrading to business?
This is a moral, individual question. You buy an economy ticket and there is a vacant seat in the business class. Do you switch or not? I’ve been offered vacant seats. I don’t.
But there will always be those loopholes, those vacant seats. Is social responsibility and restraint something the government can inculcate?
An immoral person will find a loophole where there is none. You can’t police everything. Like you can’t police morality, you can’t police a higher level of behaviour. But there is a minimum you are required to meet and that minimum has to be enforced by law. Beyond that, you have to leave it to conscience or peer pressure.