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Business
Today
1 July 2007
Mahatma Gandhi was no bleeding heart socialist.
He was a hard-nosed realist who brought the
world's greatest empire to its knees with
the sheer force of moral authority. Today,
as India Inc. scampers to incorporate "inclusiveness"
in its agenda, it is worth noting the Father
of the Nation's prescient observation on corporate
governance, decades before the concept itself
was born. "The rich are the trustees
of the nation's wealth," he had said.
Sir Adrian Cadbury was probably the first
to enshrine the "Code of Best Practices
for Corporate Governance" in 1992 at
the behest of the London Stock Exchange.
Why is Business Today writing this
edit now? Because the lopsided distribution
of the wealth created by India's steroid-charged
growth has increased inequalities, which,
if not addressed immediately — to the
satisfaction of those left out of the system
— can lead to serious social, political
and financial dislocation.
This is not to suggest — as Prime Minister
Manmohan Singh recently did in an address
to CII members — that India Inc. must
temper its hunger for profits. But what it
must do is resist the temptation of using
the massive sums now at its disposal to ride
roughshod over the common man. It could, for
example, have handled the ongoing agitations
over land acquisitions in several parts of
the country far better than it did.
The
Kumar Mangalam Birla Report on Corporate
Governance can be a good starting point.
There is a solid financial rationale for
companies to put in place transparent
and practical corporate governance structures
in place. Birla's report points out that
companies with good governance structures
are rewarded with higher market valuations.
At a time when India Inc. is aggressively
expanding its footprint across the globe,
it will do well to ensure that corporate
boards become truly independent — this
will need the induction of more independent
directors, of unimpeachable public standing
and social conscience, who can nudge managements
into initiatives that will make India's
growth rates more "inclusive",
without in any way impacting the bottom
line. The Mahatma's observation can be the
bedrock on which to build such an economic
edifice.
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