New Delhi: India’s long march from an agriculture-dominated economy at the time of independence to become the world’s biggest back-office has taken the charm away from government jobs with salaries in private sector higher by as much as two times.
According to data available with salary tracking firm PayScale, the median annual salary in a private sector company currently stands at Rs5,65,214 compared to Rs2,45,745 in the government entities.
The scenario is a far cry from those at the time of independence, when in early 1950s various government departments were established and public sector salaries used to be among the most attractive.
Yet, today wages for some of the highest government offices -- including the President of India and Reserve Bank of India -- are lower than even mid-level executives at various private sector firms.
The initial salary of the President of India -- the constitutional head of the country -- was fixed at Rs10,000 per month, which was considered to be among the highest for any office bearer at that time.
However, the President currently earns a monthly salary of just Rs50,000, a level to which it was raised with effect from 1996, which pales in comparison to the lakhs being paid to senior level private sector executives.
Similarly, the RBI Governor used to get a monthly salary of about Rs7,500 after independence, while the then Secretary and Treasurer of the Imperial Bank, now known as State Bank of India, was paid Rs4,000 a month. In contrast, the biggest of private sector firms paid a salary of just about Rs5,000 to their General Managers and Managing Directors making the government salaries much more attractive.
The situation has, however, reversed with CEOs in private sector banks earning in multiples of SBI Chairman’s annual remuneration of about Rs5,76,000 (about Rs48,000 a month) last fiscal.
Even salaries of some mid-level call centre workers are currently in excess of Rs50,000 a month -- higher than the monthly wage of chiefs of some public sector enterprises.
Global management consultancy firm Hay Group said in its World Pay Report that India’s top-level executives were taking annual salary of $92,750 (more than Rs 38 lakh).
Although salaries for top managers in India are currently lower than a number of countries, Hay Group said it might not remain so as the pay was increasing at double-digit rates in India - between 15%-20%.
Interestingly, average salary in public sector is also rising at a similar pace. The government said in its pre-budget Economic Survey released earlier this year that the per capita emoluments in public sector rose from Rs493 in 1971 to Rs23,056 in 2006.
During pre-independence days, government salaries were put at generous levels to check corruption among employees of East India Company. The trend continued for some years after independence while motivating people to seek jobs in government departments, but somehow it could not match the private sector down the years.
As per Goldman Sachs, per capita income in India will increase four-fold by 2020, but the growth is expected to be largely driven by the private sector.