Liberalization of Remuneration Guidelines in India and its Effect on Managerial Pay: Evidence from Large Corporations

Abstract

This paper examines the managerial incentives in some large Indian private sector firms for the years 1990-91 and 1993-94. The aim is two -fold: One is to analyse how the structure of managerial remuneration has changed after the July 1991 liberalization of remuneration guidelines. A second objective is to see whether there is any evidence of abnormal i ncreases in private sector remuneration after the 1991 liberalization. It is found that remuneration in real terms has increased at the upper levels of managerial hierarchy but fallen at the lower levels. However, intra-level variation in remuneration has increased at all levels of managerial hierarchy.