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BW Businessworld

Pay At Mint Road Needs To Go Up

Figures disclosed by the Reserve Bank of India under the Right to Information Act show that Governor Raghuram Rajan is not the highest paid person at the central bank

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It's irked all to know the central bank governor of the world's fastest growing economy is not the highest paid in his organisation. But what's lost in the din is not only does he get paid a pittance when compared to his peers, but that pay for Mint Road' staffers needs to be corrected by a huge margin.

Figures put out by the Reserve Bank of India (RBI) under the Right to Information (RTI) Act, show Governor Raghuram Rajan's monthly emoluments at Rs 198,700 - inclusive of basic pay of Rs 90,000, dearness allowance of Rs 101,700 and sundries of Rs 7,000. Two others Gopalkrishna Sitaram Hegde (Rs 4 lakh), Annamalai Arappuli Gounder (Rs 220,355) and V Kandasamy (Rs 2.1 lakh), get paid more. So why does the trio get paid more than the RBI boss? They are not "cadre-RBI" officials from all accounts.

Few know the RBI officers' union had a decade ago made a pitch to the management that pay was out of whack when compared to other Asian central banks; the unions made a pitch for a minimum grade-A salary of $1,000 dollars; it worked out to some Rs 45,000 back then. The biggest threat facing RBI on the human resource front is that it is no more seen as a "hot career choice" as in the past. You can earn many times over for the same skill sets in these complex financial times, especially on the risk management side in multinational (commercial and i-banks) and forensic (financial) firms.

It's Not Unusual
Two years ago, Time Inc's Money quoted Reuters -- which obtained data on the Federal Reserve's salary structure from a Freedom of Information Act request - in a report that Janet Yellen, Chair of the Federal Reserve, was paid less than at least 113 other Federal Reserve employees. She earned $201,700 a year, compared to the Fed's highest paid employee, Inspector General Mark Bialek, who made $312,000. He is followed by the bank's four regional directors, the general counsel, and chief operating officer, all of whom take home a base pay of $265,000.

And, for the record: the highest paid central banker in 2013 was Mark Carney, the Bank of England governor. That record still stays but we have no idea how much he currently pockets. A former Bank of Canada governor, his package back then was put at $1.3 million, including pay, allowances and housing costs. CNN Money quoted Carney who was forced to defend his pay when testifying before British lawmakers as saying: "I'm moving from one of the least expensive capital cities in the world -- Ottawa -- to one of the most expensive capital cities in the world."

In 2003, The Economist had this to say on central bankers' pay (Money's worth): "Our Big Mac index suggests that the rate of exchange of euros for dollars-according to the theory of purchasing-power parity-ought to be one-to-one. However, a new, alternative measure (our Big Money index, based on the relative pay of central bankers rather than the price of burgers) implies that the euro should fall to around 45 cents, from its latest high of $1.08."

It said Alan Greenspan was one of the lowest paid, on only $172,000 a year. It quoted a survey of central bankers' pay by Central Banking Publications: "Wim Duisenberg, soon to step down at the European Central Bank, earns a handsome $417,000. Even that is less than the head of the Netherlands' central bank (Mr Duisenberg's old job)".

The Economist qualified that its Big Money index has a fatal flaw: central bankers are neither tradable nor (like Big Macs) identical goods. Europe's look overpaid. "In a global competitive market where consumers can compare prices and shop around, prices in different countries should converge. But we are far from such a market in central bankers. The world's most lavishly paid is Joseph Yam, of the Hong Kong Monetary Authority, who earns 6.5 times as much as Mr Greenspan-although Hong Kong has a currency board backed by dollars, so that all its important monetary decisions are taken by America's Federal Reserve", said the Economist.

Back home, there's no reason why the Reserve Bank of India staff should not be paid more. What they now get is a pittance.

What European Central Bank Bosses Pocket (Source: Politico)

Claus Raidl: €286,000
*Salary cannot exceed that of the chancellor.

Luc Coene: €537,156

Christian Noyer: €200,000
*Salary was pegged to that of the vice-president of the Conseil d'Etat, France's most senior civil servant

Jens Weidmann: €410,744

Georgios Provopoulos: €200,000

Ignazio Visco: €495,000

Luis Linde: €160,000

Stefan Ingves: €287,352 (2,594,145 krone)

Mark Carney: €572,082 (480,000 pounds)

(President) Mario Draghi: €374,124
(Vice-president) Vítor Constâncio: €320,688

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