Indian businesses believe they are doing enough for inclusive growth and corporate charity will only get bigger from here on
As the Indian economy gallops towards what many believe is a new normal -- 8% to 9% economic growth -- its business leaders are gradually waking up to the importance of philanthropy. This formed the theme of a free-wheeling audience discussion at the cover launch of the Forbes India Rich List issue on the evening of September 29, 2010 in Mumbai.
Titled "Wealth Creation in the Next Decade - Towards a More Inclusive India," the audience comprised India's top industrialists and corporate heads. Anchored by CNBC's Menaka Doshi, the discussion took up the issue of wealth creation and what it amounted to.
According to Subroto Bagchi, vice-chairman of Mindtree Ltd. while there are several models of wealth creation, for him wealth is truly created when a person leaves a lasting legacy behind. "Physical infrastructure, intellectual and emotional legacy," are its hallmarks. At present, India seems to be equating growth with consumption and "we need to debate that," he added.
A majority of business leaders believe their organisations are doing enough to promote inclusive growth with 51 percent saying yes and 31 percent saying no. (The rest abstained.) Niranjan Hiranandani, MD, Hiranandani Group pointed out that as creating wealth for shareholder is important, the inclusive growth mantra may not be heard in the boardroom as it should, but individual giving must take care of these shortcomings. Significantly, 85 percent said that the quest for inclusive growth would not reduce their competitive edge.
Individual giving has been in the news recently with Bill Gates and Warren Buffet calling upon the rich the world over to donate 50 percent of their wealth to charity. In September, as part of "The Giving Pledge" they travelled to China to impress upon the country's millionaires the importance of giving. The two have termed their visit a success despite only one billionaire agreeing to donate. Here at the Forbes India discussion some said that the lack of credible avenues to donate to made giving a difficult choice. If Gates and Buffet reached out to the Indian rich, 48 percent said they would be willing to donate, 39 percent said no and 12 percent abstained. The Indian rich give 0.2 percent of their wealth to charity.
Amongst members of the audience there was a lively debate on whether it's only charity that can cater to promoting inclusive growth. For Gita Piramal, a business historian, banks and governments do a lot of work in educating small businesses that in her mind led to inclusive growth. Ashwin Dani, MD of Asian Paints, said the single biggest business impediment that large businesses face is land acquisition. India needs to see how that model can be tweaked to promote growth that is inclusive.
Image: Dinesh Krishnan Hiranandani Group's MD Niranjan Hiranandani makes a point about the realities of the system in which we function
For some the answer to the land acquisition issue lay in working with stakeholders. Seshagiri Rao, MD of JSW Steel spoke about the need for involving landholders in the acquisition process. In some cases this is done by promising employment or an annuity for displaced farmers. "Wherever we have involved them there has been no problem," he said. Subroto Bagchi, gardener, MindTree, laid out his simple definition of inclusive growth. "Pay your taxes right."
So when is it best for a businesses in a country to start significant philanthropic activities? Several participants laid forth their position. Some believed that India is still at an infant stage in its economic growth cycle and corporate giving would grow manifold in the years to come. This is something that would start happening in a significant way in five to ten years from now. "People in India have not yet reached giving stage," said Devita Saraf, CEO of Vu Technologies. But for others like Sanjoy Bhattacharya, managing partner of Fortuna Capital, it was as simple as writing out a cheque. Offering the example of David Booth who donated USD 300 million to the University of Chicago Graduate School of Business he said, "(All you have to do) is write a cheque."
In the end an audience poll settled the issue for now. Corporate Social responsibility as yet does not feature high on their agenda. Only 22 percent said it formed a part of their core business, while 78 percent said no. Ruia believed that paying 50% as tax (as some businesses in India do) meant doing enough for society.
In sum, while we're not there as yet corporate giving along with individual giving is set to rise in the years to come. The discussion will be broadcast on CNBC TV18 on Saturday, October 2 at 12 noon and Sunday, October 3 at 10:30 pm.
