Salman Khursheed warns firms on "vulgar" top pay

A cashier counts currency notes inside a bank in Lucknow in this July 16, 2009 file photo.

NEW DELHI (Reuters) - The corporate affairs minister has warned firms against paying huge salaries to top company brass and said the government would keep a watch on executive compensation.

India's left-of-centre Congress-led government is on an austerity drive to shore up public finances as the country's population reels under economic slowdown and the worst drought in decades.

Ministers and some lawmakers have taken salary cuts in solidarity, a sign of political pressure the Congress party faces before three state elections in October. Those polls will be the first test of the government's popularity since its May general election win.

"I think when we are working on this (austerity), we can hardly say that we (will) shut our eyes on what salary the CEOs are going to take," news agency Press Trust of India quoted Salman Khursheed as saying.

"I don't think anyone in India today, in politics or outside politics ... has reached the level of liberalism where vulgarity is also a fundamental right."

Excessive compensation has sparked outrage across the developed world after years of multi-million dollar bonuses paid out to executives, even at money-losing firms.

Politicians and policy makers have advocated curbs on these salaries, a theme echoed at the Group of 20 meeting in September.

In 2007, Prime Minister Manmohan Singh told a business lobby to avoid "excessive remuneration" and to "discourage conspicuous consumption," warning widening inequalities could lead to social unrest.

The Mail Today newspaper quoted Sajjan Jindal, managing director of JSW Steel as saying Indian firms had already reduced pay at senior levels and "vulgar salaries" did not exist.

(Reporting by C.J. Kuncheria; Editing by Alistair Scrutton and Jerry Norton)