Manmohan reads India Inc the greed act
Prime Minister Manmohan Singh told India Inc on Thursday to break cartels and abstain from ostentatious consumption and greed in their quest for profit and warned business that growing income inequalities could lead to social unrest if not addressed by the wealthy.
"The operation of cartels by groups of companies to keep prices high must end. Cartels are a crime and go against the grain of an open economy," Singh said at the annual session of the Confederation of Indian Industry (CII). "Even profit maximisation should be within the bounds of decency and greed."
These instructions were part of a 10-point social charter Singh presented to India Inc in a speech full of repeated references to the responsibility of private enterprise for ensuring equitable growth.
Singh said lavish weddings were a clear example of wasteful spending. "Such vulgarity insults the poverty of the less privileged," he noted. "We cannot afford the wasteful lifestyles of the western world. Conspicuous consumption must be reduced," he said. He proposed that companies should resist excessive remuneration to promoters and senior executives.
He also asked Indian industry to fight corruption. "Corruption need not be the grease that oils the wheels of progress," he said. "There are many successful companies today that have refused to yield to this temptation. Others must follow."
"Businessmen who enter politics should erect a Chinese wall between their political activities and their businesses," Singh said.
He asked companies to take up corporate social responsibility (CSR) initiatives, not with the objective of reaping tax benefits or because it has become a western management practice, but with the approach that the wealthy have an obligation to society and nature.
Singh appeared unhappy about the skill-development initiatives of industry and said it needed to invest more in people. "I appreciate CII's initiative in upgrading it (industrial training institutes)… but CII's current efforts need to be multiplied 1,000 times," he said.
He asked Indian industry to pay more attention to environment-friendly technologies, promote enterprise and innovation, invest in the welfare of employees and undertake affirmative action initiatives by offering equal job opportunities to people from the backward classes.
The industry reacted positively. President-elect of CII and chairman of Bharti Enterprises Sunil Bharti Mittal described Singh's remarks as one of the most remarkable addresses to the industry in a long time. "The prime minister is right in saying that we need not ape the West in conspicuous consumption. There are a lot of inequalities in the country, and I agree that it is payback time now," Mittal said.
"Everything must be balanced and the industry must respond to the prime minister's remarks," said Jagdish Khattar, managing director of Maruti Udyog Limited.
Ratan Tata, chairman of the Tata Group, said his companies had invested Rs 600 crore in CSR-related activities in the last financial year, compared to Rs 450 crore in 2005-06. He said the Tatas had started many premier institutions in the country like the Tata Institute of Fundamental Research and Tata Memorial Centre (for cancer research) in Mumbai, or the Indian Institute of Science in Bangalore, but these were all taken over by the government. "We then decided not to engage in such activities," he said. "It is only recently that we decided to start a cancer institute in Kolkata."
Managing director of Ashok Leyland and outgoing CII president R Seshasayee called the speech very relevant in the context of our times. "It is time we go beyond business and look at the social issues also," he said. "Industry has a responsibility to society and has an obligation to participate in a national cause."