Do Ethics Matter In India?

Here are some facts about India to decide how the country is progressing as a global power. Assess from these factors whether business ethics matter to India.

  • In Forbes World Billionaires list Mukesh Ambani and Lakshmi Mittal are ranked fourth and fifth respectively, and there are over 50 billionaires in India.
  • Forbes Powerful People list for 2010  has four Indians with Sonia Gandhi  ranked 9th in the world.
  • The Forbes Global 2000 list of 2010 is ranking   world’s leading companies based on  sales, profits, assets and market value. There are 58 Indian companies in the list with Reliance Industries ranked  126th and State Bank of India ranked 130th.

Ethisphere conducted two surveys. One list consists of 2010 World’s Most Ethical Companies and the other is of 2009’s 100 Most Influential People in Business Ethics. In both these lists I did not find a single Indian name!

The Corruption Perception Index 2010 issued by Transparency International shows India ranked 87th of the 178 countries listed. The score is 3.3 which comes under highly corrupt countries.

The question is can India become a global economic power when it is portraying such a dismal picture in business ethics?

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12 comments on “Do Ethics Matter In India?

  1. Nice summary, Sonia.

    Even people like Narayan Murthy, Nandan Nilekani and Ratan Tata talk about honesty and values but support the corrupt political parties of India. What use are their ‘values’ if they restrict these to their own companies?

    Regards
    Sanjeev

  2. Wonder what is the yardstick to measure the ‘Values” and ‘Ethics” in the perspective. I have read the latest book on ‘How the Tata brand was built” and am convinced they do have values and ethics. Now how that is percolating down to the industry segment at large is a question all of us need to answer.
    But yes this is a good summary and interesting one at it. Just to add to it is also the fact that with over 8 trillion in debts, the USA also can’t be the superpower!

    • Thanks Sanjeev and Murali for your comments. What you have pointed out is absolutely correct. Industralists in India are not walking the talk publically regarding Ethics.

      For example, when Godhra riots occured, all of them condemned it. Now Tata facing trouble in West Bengal quickly did a deal with Narender Modi and opened the Nano plant in Gujarat. I agree Gujarat need to develop as a state and people should not suffer from the Chief Minister’s wrong doings. However, if the indsutralists are not the torch bearers, who are the remaining candidates for it.

      If you read the list of Ethisphere, it is mostly CEO and regulators who are contributing in other countries.

      See USA again has lost ground this year on the corruption index because of the financial crises and foreclosure norms. With all the damages to the economy because of the excessive war in Afganistan and Iraq, and dubious support to Pakistan, USA is definitely losing its position. It needs to gear up its internal act, rather than focus on China and India.

      Sonia

  3. My own knowledge of specifically India (let alone the companies/individuals mentioned above) is limited. However, I have a general impression that

    1. Lack of ethics can be good for some individuals, companies, and (sometimes) industries.

    2. For the country, industry, population, whatnot, as a whole, lack of ethics is decidedly harmful.

    A good analogy could be to consider ethics a cooperative and lack of ethics a non-cooperative strategy to the prisoner’s dilemma (http://en.wikipedia.org/wiki/Prisoner%27s_dilemma ) or a similar game theoretical scenario.

    Thus, I suspect that India would be able to produce a great number of billionaires without ethics—but if it truly wants to prosper, ethics is a necessity.

    • Michael,

      Thanks for reading my blog and sharing your viewpoint. In India Mukesh Ambani the 4th richest man in the world constructed the world’s most expensive home. A 27 storey building costing USD 1 Billion. India ranks 67th in the Global Hunder Index, and its score is in alarming category. http://www.ifpri.org/publication/2010-global-hunger-index.

      This shows that a few Indians may become rich, but this will not make India a global economic power. You are absolutely right in saying that to prosper ethics is a necessity. It is not otional but mandatory.

      Sonia

  4. Sonia,

    You are offering a lot of new insights about India, at least for me. Sooner or later, ethical lapses inflict greater damage than the short term gains they may generate. You need to look no farther than Enron or Global Crossing or the countries in which outside investments have dried up. When trust is eroded, it’s hard to win back.

    I appreciate your approach of presenting facts and letting your readers draw their own conclusions.

    Steve

    • Steve,

      Thanks for the appreciation. I am doing my bit in building awareness regarding India, its culture and approach towards risk management. I hope it will remove some misconceptions and provide some insight. I would consider myself successful if the ideas are debated upon. Human beings first sign of starting to think is that when they commence debating. When they start debating they take a stance, and generally act towards betterment of the society.

      Sonia

  5. Thanks Sonia.

    I agree. I am reminded of JRD Tata who put half his funding for Nehru’s Congress (since he couldn’t avoid it) and half for Rajaji’s Swatantra.

    Today, there is NO (classical) liberal party, no opposition to the rampant corruption in the government from all parties, and no motivation among these new industrialists to intervene, as citizens, in the affairs of their nation.

    Self-focused and inward oriented, they imagine the nation is not their business. That’s a serious mistake. India’s industrialists should consider playing a genuine reform-oriented role and stop funding the corrupt political parties of India.

    Regards
    Sanjeev

    • Sanjeev,

      I couldn’t agree with you more. You have raised an extremely valid point.
      I was reading Corporate governance issues in Tata from JRD to Ratan Tata time, had written a paper then also. It indicates that In Ratan Tata time the groups ethics has deterioated significantly. Ratan Tata is quite a few public cases has not walked the talked of putting business ethics above business profits. And that is reflecting on the organization.

      Indian Independence ( you are far more knowledgeable on the subject, so pardon my mistakes) was gained by educated uper middle class. They put their differences aside, and used their intellect to win Independence. The 1857 revolt led by Rani Lakshmi Bai failed because Maharaja Scindia compromised his ethics, betrayed the moment and supported the Birtishers. We need to learn that all change in the country is led by the educated class, niether the poor or the rich have succeeded in it.

      So Indian middle class needs to do something about it. There is an interesting discussion going on regarding this topic in today’s post. You might like it :)

      Sonia

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