Any one who is on VP/Director/Senior engineering managers levels is buying 2.5 Crore+ villas. Expensive cars, having vacations in foreign countries and crazy lifestyle spending's.
The definition of well paid just became a whole lot different. And there is no way anyone can live that kind of a lifestyle working for a government firm.
Again, you can be happy with what you get. But that thought doesn't work always. Peer pressure does amazing things to you. Even if you don't get into it yourself, you will get into it eventually once you start a family.
Also note, that the public retirement investment vehicles today are strong enough and sometimes even better than the government ones. We are no longer in 1980's India. If you are well paid, you can buy your own food, pay your own bills, have your own home, car etc.