That bankers in the public sector can hope to get extra money for delivering results, without being tied down to the levels of pay given to secretaries in central government departments, is a long-overdue bit of reform. There was never a good reason, other than civil service jealousy, for pegging commercial sector salaries to those in the administration because the demands of the two are quite different, as also their market value. One is trained to follow the rules and precedents, the other has to learn to take commercial risk. One can survive and even prosper by opting for the path of least resistance, the other has to deliver the promised financial numbers at the end of the year. Given this somewhat obvious set of differences, there has been no shortage of public sector bankers who got fed up with their below-market salaries and wandered off into private banks or other fields of enterprise. Most of them were willing to make a small financial sacrifice for the non-financial joys of working in the public sector, but in a field of enterprise where pay and perquisites are higher than normal around the world, it is understandable that many of them did not want to go through life looking like really poor cousins. Indeed, it is remarkable that so many high quality bankers have chosen to stay on in the public sector, despite the financial travails. For instance, the chairman of the State Bank of India, which is one of the largest banks in the world, is paid less than an entry-level officer in many private banks. So no one should be surprised that the best people are not to be found in the public sector banks, which as a result have tended to turn in performance levels that do not match those of their private sector rivals. | |
| Some solutions have been worked out within the banks; for though pay levels were fixed and could not be tampered with, perquisites could be doled out more generously in terms of better housing, cars, entertainment accounts and so on "" though even here, public sector parsimoniousness has meant that most bank chairmen still go about in fairly modest vehicles. In any case, none of this translated into cash in the wallet at the end of the month, and that hard reality needed to be addressed. This has now been done without formally divorcing from the civil service's pay, by working out an incentive package that is linked to performance and longevity at the top. This is not a perfect solution, but it is a vast improvement. |
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| There is no reason why the same thing should not be done in other areas of public sector enterprise, so that the chairman of the Oil and Natural Gas Corporation, which is the country's largest enterprise, does not have to worry about whether he can afford a good suit or a good education for his children. Indeed, the ranks of the private oil companies are full of people who have deserted the public sector at the first opportunity that came their way "" and the losers are ONGC and Indian Oil. This absurd situation needs to be addressed across the entire range of public sector enterprises, with some of the ingenuity that has been shown while addressing the bankers' issue. The revisions should be linked to targets and performance, so that they do not become free hand-outs. And this should be done for the entire managerial cadre, not just at the top. |
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