The Indian Economy Blog

February 21, 2007

On Corporate Political Resposibility

Yes, the IT industry has to do more for India. But not what Amartya Sen says it should

Amartya Sen made a JFK-esque speech asking the IT industry what it had done for India. His point was not that the IT industry isn’t doing anything for the economy at large—he concedes that it is—but that it should do ‘much more’. Indeed, Sen argues, given that it has benefited from the country’s contributions to its development, the industry should have a ‘sense of obligation’ to do much more.

Sen has a point. But it’s not the one he intended to make. The IT industry’s primary obligation is to its shareholders and customers. It will be doing its bit for the country as long as it does this with efficiency and excellence. This ‘sense of obligation’ may not even apply to state-owned enterprises and public sector undertakings who can best serve the country by sticking to their charter than by attempting to champion various good causes. Of course, corporations, like citizens may want to do good for the society they are a part of. But they have no moral or legal obligation to do so. In a country where a communal socialist government is not only unwilling to do the needful to unshackle restrict labour laws that hurt both employers and employees but is also attempting to impose community-based quotas on private companies, the use of the word obligation must be treated with extraordinary care.

What is true is that Indian industry in general has chronically under-invested in improving the quality of governance. Industry associations like FICCI, CII, ASSOCHAM and NASSCOM have seen themselves solely as a voice of their members. In India’s political economy they are an ‘interested party’ on various issues. Furthermore, their ability to shape government policy has been limited to the extent their most influential individual members have been able to create and exploit specific loopholes that only benefit a small number of companies. Thanks in part to the license-permit raj and its legacy, large corporate houses have found it more worthwhile to invest in ‘fixers’ who could work on the concerned ministry rather than in broader initiatives that benefit the industry as a whole. Contrary to what Sen argues, NASSCOM has perhaps been more inclined to pursue a progressive industry-wide agenda than its ‘old economy’ counterparts. Furthermore, there are private commercial ventures, like those that Rajesh Jain and Atanu Dey are working on, for instance, that seek to both address a social need and turn a profit at the same time.

But where are the think-tanks, the public policy schools, the social science research endowments and sponsored professorships? To its credit, corporate India has foundations working on setting up village schools or improving rural infrastructure. While these are commendable, they are no substitutes for the industry applying sustained pressure on government to do its job well. Running village schools and improving rural infrastructure, after all, is the government’s job. The Acorn has argued in the past that the IT industry has to find its political feet. Not because it has an obligation. But because it is necessary for its own growth and development. The externalities from doing so can far more profoundly benefit the nation than from any ‘obligations’.

Cross-posted from The Acorn, where you can join the discussion on this post

4 Comments

  1. [...] The Indian Economy Blog on corporate political responsibility. “But where are the think-tanks, the public policy schools, the social science research endowments and sponsored professorships? To its credit, corporate India has foundations working on setting up village schools or improving rural infrastructure. While these are commendable, they are no substitutes for the industry applying sustained pressure on government to do its job well.” Neha Viswanathan [...]

    Pingback by Global Voices Online » Blog Archive » India: On Corporate Political Responsibility — February 22, 2007 @ 12:14 am

  2. [...] Jokers of Indian Economy Blog offer this great insight Sen has a point. But it’s not the one he intended to make. The IT industry’s primary obligation is to its shareholders and customers. It will be doing its bit for the country as long as it does this with efficiency and excellence. This ’sense of obligation’ may not even apply to state-owned enterprises and public sector undertakings who can best serve the country by sticking to their charter than by attempting to champion various good causes. Of course, corporations, like citizens may want to do good for the society they are a part of. But they have no moral or legal obligation to do so. In a country where a communal socialist government is not only unwilling to do the needful to unshackle restrict labour laws that hurt both employers and employees but is also attempting to impose community-based quotas on private companies, the use of the word obligation must be treated with extraordinary care. [...]

    Pingback by Krishworld Politics » Typical right wing bullshit — February 22, 2007 @ 1:29 am

  3. [...] Nitin Pai, on the Indian Economy Blog:  Of course, corporations, like citizens may want to do good for the society they are a part of. But they have no moral or legal obligation to do so. In a country where a communal socialist government is not only unwilling to do the needful to unshackle restrict labour laws that hurt both employers and employees but is also attempting to impose community-based quotas on private companies, the use of the word obligation must be  treated with extraordinary care. [...]

    Pingback by Communal Socialism and Market Communalism at Blogbharti — February 24, 2007 @ 11:56 pm

  4. [...] There has been a lot of discussion on how the IT industry should do more for India. There are some out of touch views and some sane views. It is nothing short of a miracle that we are talking about an industry today, which was almost not an industry. The IT industry would not have happened had it not been for the foresight of some of those who laid the foundation of what is today a billion dollar industry. [...]

    Pingback by The Indian Economy Blog » Indian IT Industry — April 22, 2007 @ 6:16 am

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