The fact that India is home to one of the largest number of billionaires as well as the largest number of people living below the poverty line is testimony to the huge contrast witnessed here. But this divide is not just restricted to wealth distribution. But is beginning to being seen in matters relating to ethics and integrity as well.
Take the case of HDFC. This financial institution is the sole Indian company figuring in Ethisphere Institute's (a New York City think tank) fifth annual list of the World's Most Ethical Companies. Now, this think tank may not be that well known in India. Hence, its views do come under the scanner. But what is important is that out of several Indian companies that it studied, only one made it to the list!
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Ethisphere's stamp of approval or not, the point is that Indian companies need to do a fair amount of work on the ethics and good practices front. Indian companies have already begun making a mark in the international arena because of the low cost advantage that they enjoy and good English speaking skills. Many have also moved up the value chain and have done overseas acquisitions all by themselves rather than looked upon as targets by international majors. Some of India's big names in the corporate world such as Infosys and the Tatas are also widely respected overseas. But overall for India Inc on the governance front, efforts seem largely wanting. The Satyam fiasco, the telecom scandal and the murky dealings in real estate are some examples that have tarnished India's image.
Now, we are not recommending the stock of HDFC here. But, it would be to India Inc.'s benefit if it takes a leaf out of HDFC's book and steps up initiatives on the governance front. This is not just to make an entry into annual lists but step up investor confidence and widen the gamut of good companies that they can invest in. Please be informed that more than the Government it is the private sector that ensures long term wealth creation in an economy. And it is good governance that makes this wealth creation more equitable and sustainable.
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