Blunt Ratan Tata speaks of flaws in governance in India

New India will thrive if there is equality in the enforcement of laws

GN Bureau | June 19, 2015


#ratan tata   #tata sons   #india   #governance   #csr   #corporate social responsibility  

Tata Sons Chairman Emeritus Ratan Tata has questioned the basic of governance and sought to redefine it in the post-liberalisation India. He was also at pain to explain how weak enforcement of rules and regulations is affecting the country.

“We have to go back and ask ourselves how we define governance as. All of us have lived several decades in governance that was micro managing our business and destroying our ability to grow which changed in 1990 when India opened up,” said Ratan Tata at the annual meeting of Indian Merchants Chamber on Thursday in Mumbai.

Underscoring the importance of good governance, he said, “I believe that governance has an important role in promoting growth. It’s not going to happen in uncharted waters. The government’s job is to encourage growth through legislation and policies.”

“Governance is a means of ensuring that enterprises operate within a framework of a policy. What we are often weak is in enforcement. Our greatest weakness is inequality in enforcement… it depends on who you are,” Tata said.

 "And the hope, one would have for new India would be total equality that whether you are a billionaire or a street vendor you have the same rights to be governed by law and order in the same manner."

He said if the country improves on equality, then the governance will take more transparent position to just ensure that one is operating within the law of the land.

"Governance is merely to ensure that you are within the law of the land and enforcement should be the driving force of keeping people within that sphere. We are not there as yet...," Tata said.

Ratan Tata also said there should be a set of guidelines to monitor spending of CSR funds by corporates as there might be some companies either "wasting money" or "siphoning in some form".

"I don't think you can make it (CSR) into a tax which is 2 per cent of your net profit. We don't expect that there should be a penalty (for not adhering to)," he said.

"There are companies that will make great contribution to the country and there would be some companies which would be either wasting the money or siphoning in some form," Tata said.

The amended Companies Act requires large companies to spend at least two per cent of their profits every year on CSR. “People have asked why we have spent that kind of money which belongs to the shareholders but I believe that each company has the responsibility to work for people who are not just directly involved with the company,” Tata said.

His mantra for governing a large company comprising of people from different backgrounds is: to set the value system from the top and if there are aberrations, enforce a penalty for the same.

He also emphasized that “Indian enterprise needs to be encouraged. One needs to lend mentoring to young people to give them a chance.”

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