Lessons in charity: India Inc says no to Buffett, Gates - Corporate Trends - News By Company - News - The Economic Times

Please do not mix Corporate Social Responsibility with philanthropy by the rich. While CSR is about corporate responsibility of the business involving the companies' resources, philanthropy involves the personal wealth of the individual business magnates. In the West, this trend of philanthropy was partly driven by the penalty of huge inheritence taxes (if wealth earned during a life time was not given away in charity before death). In India, sadly the such a strong institutional mechanism (to deter individuals from holding on to wealth till death) does not exist. A country like ours with large sections of its people living in poverty needs such institutional interventions to steer the wealthy towards building charitable foundations.

Lessons in charity: India Inc says no to Buffett, Gates - Corporate Trends - News By Company - News - The Economic Times

What has shaped Governance in India?

PeerPower : Culture and institutions matter in governance

As usual, another great article from R Gopalakrishnan. Drawing from Indian mythology, interesting insights have been provided on Indian mentality. My best part was his take on the "kiss up and kick down" culture pervalent in Indian society. Also his insight that "the giveaways of bad governance lie in behaviour".

"Pratip Kar, while at Tata Management Training Centre, showed that one or more of five signals from the C-Suite provide early warning: constantly being applauded by the media as being visionary and daring; displaying excessively risky but exciting ambitions; showing high connections and lifestyle; being hubristic and egoistic; being surrounded by ‘non-smelly’ individuals, yet appearing ‘smelly’."

My recommendation: hit the link and read on. It will be worth your while.

India needs a more equitable legal framework

This is in response to the article that appeared at: http://www.outlookindia.com/printarticle.aspx?265171

Except for a few "सर फिरे ", nobody believes that democracy will fail in India.

Facts are disputable on both sides (Activists and the government). They are often manipulated for their own agenda. But as I mentioned elsewhere, India remains largely a country of conglomerates where existing business families hold sway in a crony capitalistic way. There is a dearth of self made business icons in the country barring some examples in the IT sector. (These success stories were possible because the product in this case was 'invisible' to the bureaucrats and also because the markets were abroad).

Some may argue, what about Dhirubai Ambani? Well, Dhirubai was already a wealthy man when he returned to India from the UAE. So he wasn't really self made entirely in India. Back in India, he was more a product of crony capitalism - the most undesirable form of capitalism. His sons Mukesh and Anil Ambani are anything but self made men. My point is that truly capitalistic societies have mechanisms to ensure that every generation has to toil to make it big and I believe that we should have those mechanisms in place.

As we take the capitalist route, we have an opportunity as a nation to adopt appropriate policies that would create a more equitable society. Otherwise, wealth will be concentrated in few hands and they will control everything else in the country.

On the issue of tribal development:

I am all for development, but if you take a headcount of people in the tribal lands where industrial development has taken place. Tribals have become a minority in their own land. All jobs have gone to the settlers. (Barring a few, tribals are mostly unemployable). If sophisticated Maharshtrians can be miffed about it, why not tribals?

Industrial development isn't having much effect on their lives. For that to happen human development is required. Human development of tribals requires a missionary zeal which a corrupt administration cannot offer. The British administration in conjunction with the missionaries had such a zeal and the results are 85 to 90 percent literacy rates in some of the North Eastern states.

Clearly, the government needs to move ahead from the current legal framework that has resulted in crony capitalism and concentration of wealth in the hands of the few, to one which would enable a more equitable capitalistic society. Therefore, laws need be tweaked to create a more level playing field for the emergence of new business icons from each generation. We need to investigate the legal framework which exists in the US and most other developed nations which allows the rise of first time entrepreneurs like Bill Gates who goes on to become the richest man on earth and then creates a foundation to give back most of his wealth in charity. Apart from philanthropy, what is inducing this behavior? Here's some hint.

I bank on charitable foundations to deliver human development more than the government because of their efficiency. And I mean Charitable foundations created from individuals' personal wealth not corporate social responsibilty. There is a difference.

India's great escape from the socialist zoo : India : S A Aiyar : TOI Blogs

This article appeared in the Times of India on 18-04-10.

India's great escape from the socialist zoo : India : S A Aiyar : TOI Blogs

My reaction to this article: Excellent analysis, I agree with most of it. But India remains largely a country of conglomerates where existing business families hold sway in a crony capitalistic way. The examples cited of the IT sector are exceptions not the rule. These success stories were possible because the product in this case was 'invisible' to the bureaucrats and also because the markets were abroad.

To take a contrarian view, the fact remains that about 30 crore people in this country live in abject poverty. The tribals in this country were perhaps relatively better off under the British rule than they are today. They have lost most of their land to the settlers and have become a minority in their own land. In many places, arbitrary political boundaries have divided the tribals or adivasis of one ethnicity between several states. Their culture has been hijacked. Their children who come to towns & cities to work as household servants are abused or raped every day. (Most of it goes unreported).

I have wondered what is it about the developed nations and many of these newly industrialized nations that makes them prosperous and equitable. One law in particular that comes to my mind is the Estate tax which is imposed when wealth is passed on to the offspring via a will or on the death of a person. (This law mostly applies to the super rich). The crux of the law is that people who have amassed huge amounts of wealth in their life time can bequeath only a reasonable portion of their wealth to their children while the excess wealth becomes part of the state exchequer if not already given away in charity. This tough law has resulted in numerous charitable foundations and universities in the US. (If Bill Gates, Warren Buffet and others are giving away all their billions in charity, it’s partly because of this law). It’s amazing, even the communists in India haven’t lobbied for this law. It is countries like India; with wide spread disparities in income levels that need this law.

India's great escape from the socialist zoo : India : S A Aiyar : TOI Blogs

This article appeared in the Times of India on 18-04-10.

India's great escape from the socialist zoo : India : S A Aiyar : TOI Blogs

My reaction to this article: Excellent analysis, I agree with most of it. But India remains largely a country of conglomerates where existing business families hold sway in a crony capitalistic way. The examples cited of the IT sector are exceptions not the rule. These success stories were possible because the product in this case was 'invisible' to the bureaucrats and also because the markets were abroad.

To take a contrarian view, the fact remains that about 30 crore people in this country live in abject poverty. The tribals in this country were perhaps relatively better off under the British rule than they are today. They have lost most of their land to the settlers and have become a minority in their own land. In many places, arbitrary political boundaries have divided the tribals or adivasis of one ethnicity between several states. Their culture has been hijacked. Their children who come to towns & cities to work as household servants are abused or raped every day. (Most of it goes unreported).

I have wondered what is it about the developed nations and many of these newly industrialized nations that makes them prosperous and equitable. One law in particular that comes to my mind is the Estate tax which is imposed when wealth is passed on to the offspring via a will or on the death of a person. (This law mostly applies to the super rich). The crux of the law is that people who have amassed huge amounts of wealth in their life time can bequeath only a reasonable portion of their wealth to their children while the excess wealth becomes part of the state exchequer if not already given away in charity. This tough law has resulted in numerous charitable foundations and universities in the US. (If Bill Gates, Warren Buffet and others are giving away all their billions in charity, it’s partly because of this law). It’s amazing, even the communists in India haven’t lobbied for this law. It is countries like India; with wide spread disparities in income levels that need this law.