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Posted by Reetika Khera and Meghna Yadav

The Indian government announced a stringent and complete lockdown in the early days of COVID-19 cases being detected in India, without much thought to what it might to do the economy and the lives of people. The devastation it caused became evident very quickly – starting with shocking visuals of desperate workers stuck without work, food, water, shelter, transport and culminating with news of a contraction of the GDP by nearly 24%. All of this led to demands of the government to ‘do something’ about the situation that arose. The demands for relief from the corporate sector were as vocal as those for relief for workers who had been left high and dry. 

The data we report here, as part of our independent research on inequality in India, sheds light on how the demands of the corporate sector should raise some questions. The same corporate houses that were begging for relief from government to “save” their businesses, were simultaneously paying out unimaginably high salaries to their CEOs, with pay ratios that indicated grave income inequality. 

Also read: Covid-19: What Happens To An Already Hard Hit Economy Like India?

The data we report here, as part of our independent research on inequality in India, sheds light on how the demands of the corporate sector should raise some questions. The same corporate houses that were begging for relief from government to “save” their businesses, were simultaneously paying out unimaginably high salaries to their CEOs, with pay ratios that indicated grave income inequality. 

Pay Ratios in India

Since 2015, a Securities and Exchange Board of India rule requires that publicly traded companies disclose the remuneration to their top management vis-à-vis other employees. The disclosures are mandated under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. 

Publicly traded companies have been reporting the median salaries of employees and remuneration paid to “Key Managerial Personnel” (KMP). The median is like an average, which indicates the salary level at which half of the employees earn below it and half earn above it. For instance, if the median is, say Rs 2 lakhs per year, it means that half of the employees earn less than that. 

The ratio of the median to the salary of the top-paid KMP (or, ‘pay ratio’) is a measure of inequality of pay within the company. A pay ratio of 2 means that the KMP is paid twice as much as the median/middle employee – i.e., if the median remuneration is Rs 2 lakhs per year, the highest paid person gets Rs 4 lakhs per year. 

We compiled these ratios for 42 private companies in the NIFTY fifty list for 2019-20. We excluded the eight publicly listed companies that are part of the NIFTY50 as they are exempted from this disclosure. (The BPCL report states that “Similarly, Section 197 of the Act shall not apply to a Government Company (p. 50).” PowerGrid Corporation of India, NTPC, ONGC, GAIL, Coal India, BPCL, Indian Oil Corporation and SBI are government owned companies in the NIFTY fifty.)

Table 1 (given below) reports the pay ratio (in descending order) of the top paid Key Managerial Personnel (KMP) to median remuneration. The total remuneration paid to the top KMP is also included.

What did we find? 

We would like to highlight three findings from our analysis – the obscene levels of inequality, a blatant disregard of the law by some and the lack of diversity among those at the top.

Even within these companies there is massive inequality in pay. The highest pay ratio is 1:752 – which means the highest paid person gets 752 times the salary of the median earning employee. The annual remuneration in this case was Rs 84.6 crores – that of Mr. Pawan Munjal at Hero Motocorp. The lowest pay ratio was at Maruti Suzuki, at 1:39. 

Nigeria, Singapore and India fuel wealth gap: Oxfam | World News,The Indian  Express
The highest pay ratio is 1:752 – which means the highest paid person gets 752 times the salary of the median earning employee. The annual remuneration in this case was Rs 84.6 crores – that of Mr. Pawan Munjal at Hero Motocorp. Image Source: Indian Express

The average of these pay ratios is 1:259. So, on average the top-paid person gets nearly 260 times the median employee.

These inequalities can only be termed obscene because data from National Sample Survey for 2017-18 suggest that only 17% of male workers earn more than Rs. 10,000 per month. The median salaries of the NIFTY50 are six times this amount.

Strangely, or perhaps not, we find that despite such mind-boggling high remuneration for the top paid employee, for 15 companies (out of 37 for which this data was available) the percentage increase in salary of the top paid person exceeded the increase in salary of the median employee! This only suggests that these companies have no commitment to creating flatter remuneration structures.

Another finding is that Reliance has avoided making these mandatory disclosures since 2016-17. It is the only private NIFTY fifty company that does not report these pay ratios.

The second startling finding is that Reliance has avoided making these mandatory disclosures since 2016-17. It is the only private NIFTY fifty company that does not report these pay ratios. Instead, their Annual Report (p. 219) states:

“Disclosures relating to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. Having regard to the provisions of the second proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member interested in obtaining such information may write to the Company to email idrilagm@ril.com.”

Meanwhile, our watchdogs appear to be asleep.

The third noteworthy aspect of our analysis is the lack of diversity at the top. Among those in the list of the highest paid KMPs it is unsurprising, yet worth drawing attention to, that there is only one woman, at least one Muslim and perhaps no Dalits or Adivasis. A “glass ceiling” exists for everyone other than upper caste men. 

Where do we stand in comparison with other countries?

Similar regulations pertaining to such disclosures exist in other countries – e.g., from 2020 onwards, companies in UK with more than 250 employees are mandated to make pay ratios public. In the US also, the US Securities and Exchange Commission requires such disclosures to be made since 2015.

By this measure of inequality, India appears to be among the worst in the world (see this). The Guardian reported that the CEOs of the top 100 companies were paid the typical workers annual salary within 33 hours. In comparison, if Mr. Munjal works half a day, his earning already exceeds the annual earning of the median employee. As mentioned earlier, the lowest pay ratio among the Nifty50 was at Maruti Suzuki. It turns out that internationally Japanese companies tend to have the lowest pay ratios. Different explanations have been proposed for this. 

In India, public discussion on poverty and inequality is muted; to the extent that when one hears of it, the emphasis is more on poverty and less on inequality. It is also important to have a discussion about the overlapping nature of these inequalities (e.g., social and economic). On sharing these findings on WhatsApp, someone wrote back: “what has religion or cast [sic] got to do with biz? Why did he not comment that in the Nifty 100 we don’t have any Brahmin? Only JP Gaur used to be in the list. Even this list will have max 3-4. Keep dividing India and blame political parties when educated people do this.”

The wording was garbled, but the message was clear: do not discuss this data point. Similar arguments apply to gender inequality.

Elsewhere, in contrast, discussion of diversity appears to be a legit topic. For instance, The Wall Street Journal recently carried an article about the lack of diversity in America’s top 500 companies. Out of 500 CEOs, only four (i.e., 1%) are Black. The issues faced by African Americans in the US as highlighted in the WSJ article are likely to resonate with Bahujans and women in India.

Also read: Where Do Women Figure In The Indian Economy?

Now what?

As attempts are made to silence a discussion on such topics, it is harder to make this a political issue. Elsewhere there appears to be some discussion on it. 

Interestingly, Israel adopted a law in 2016 curbing pay ratios in banking and insurance companies to 44 times salary of lowest worker. Anything above this is subject to higher taxes. A similar proposal was made by Bernie Sanders last year: impose higher taxes on companies where the pay ratio for CEOs to median workers exceeded 50. His proposal was to increase the tax rate by 0.5% for companies where the ratio was between 50-100, and progressively higher if it exceeded that. This discussion remains alive there.

In Switzerland, a referendum was held on whether there should be a cap on executive pay. It was defeated. In the European Union, shareholders vote on director pay every 4 years, though the vote is not binding. 

While legal curbs are mostly lacking, one can find glimpses of self-regulation in the private sector. Dan Price, a CEO based in Seattle, reduced his own salary and fixed a minimum wage of USD 70,000 for all employees in his company. Elsewhere, civil society groups are organising to highlight this issue. For instance, The Equality Trust tracks and contextualises inequalities in pay ratios. 

Indian pay ratios in the time of COVID-19

In India, at least some big private players are more willing to lay off employees or reduce their pay than to touch top CEOs. For instance, Infosys reported performance-based exits’ and the headcount of employees fell by 3000 in the first quarter of 2020-21. Though Nandan M. Nilekani voluntarily chose not to receive any remuneration for his services rendered to the Company”, he holds 1% of shares in Infosys. Salil Parekh, the highest paid person at Infosys exercised stock options worth Rs 17.03 crores in 2019-20, which is as high as the remuneration paid to him.

Similarly, Reliance announced pay cuts for employees earning more than 15 lakh per year. According to the annual report, “Compensation of Shri Mukesh D. Ambani, Chairman and Managing Director, has been set at Rs 15 crore, reflecting his desire to continue to set a personal example for moderation in managerial compensation levels.”; it has reportedly not increased in 12 years. 

Public awareness is first step towards remedying the situation. The disclosures mandated by the Companies Act are a good start. Ensuring that this is implemented in spirit should be the next step. It is puzzling that for years now, RIL has gotten away without anyone noticing the reporting lapse on their part. Greater transparency and standardisation in reporting norms would also be welcome. The regulatory body (SEBI) and the government clearly need to do more. 

Pay ratio of highest paid employee to median remuneration

CompanyPersonPay ratioRemuneration (in cr)1
Hero MotocorpPawan Munjal75284.6
Shree CementsHM Bangur659.841.75
Tech MahindraC.P. Gurnani618.463.56
Bajaj AutoRajiv Bajaj60039.86
JSW SteelSajjan Jindal58139.11
Hindalco Inds.Satish Pai520.5631.9
InfosysSalil Parikh50217.23
WiproAbidali Neemuchwala49516.83
Bharti AirtelSunil Bharti Mittal428.9430.13
Eicher MotorsVinod K. Dasari398.824.61
CiplaUmang Vohra37810.96
Bajaj FinanceRajeev Jain373.2217.5
Larsen & ToubroS.N. Subrahmanyan316.8527.18
Brittania Inds.Varun Berry288.799.79
Dr Reddy’s LaboratoriesG.V. Prasad28314.38
HDFC BankAditya Puri28218.92
UPLRajnikant Shroff23513.7
UltraTech CementK. K. Maheshwari217.2220.83
TCSRajesh Gopinathan214.6513.37
Tata MotorsGuenter Butscheck198.7716.44
Grasim Inds.Dilip Gaur169.637.48
ITCS. Puri1687.58
Asian PaintsKBS Anand160.9614.4 – 20.773
Hindustan UnileverSanjiv Mehta15116.22
Nestle IndiaSuresh Narayanan14016.17
Adani Ports SEZMalay Mahadevia134.411.2
IndusInd BankRomesh Sobti1305.65
HDFCKeki M. Mistry12715.4
Bharti InfratelAkhil Gupta124.988.9
Sun PharmaKalyanasundaram Subramanian121.866.05
M&MPawan Goenka111.4410.03
ICICI BankSandeep Bakhshi1115.7
Tata SteelTV Narendran105.111.22
HDFC Life InsuranceVibha Padalkar99.914.94
Axis BankAmitabh Chaudhry92.26
Titan CompanyBhaskar Bhat86.656.23
Zee EntertainmentPunit Goenka78.429.02
HCL TechShiv Nadar46.864.73
Bajaj FinservSanjiv Bajaj46.2810.82
Kotak BankUday Kotak42.682.65
Maruti SuzukiKenichi Ayukawa39.074.67
RILNikhil & Hital MeswaniNot reported24.00

Notes: 1 Remuneration is generally from a table titled “Remuneration of Directors and Key Managerial Personnel”. Sometimes, it is also reported along with the pay ratio. It does not include stock options. In two cases (see notes 2 and 3), the amount reported in the two tables varied significantly. 2 Until 31.12.19; To calculate the pay ratio, the report uses Rs. 12.92 as his remuneration because he retired in December. 3 Rs 20.77 crore includes “Others – Employment contribution to provident and other funds”. The pay ratio uses Rs 14.4 cr.


Reetika Khera is a development economist. She teaches economics at IIT Delhi. Meghna is a graduate of the Delhi School of Economics. She can be found on Twitter. They both belong to Road Scholarz, a freelance scholars and students volunteers group.

Featured Image Source: Nassau Institute

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