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Singh targets ‘ethical deficit’

Prime Minister Manmohan Singh today appeared to back the environmental evangelism blessed by Rahul Gandhi and pursued by Jairam Ramesh, saying “the business practices of some corporate houses have come under intense public scrutiny for their perceived ethical deficit”.

Although the Prime Minister’s statement, made at India Corporate Week, carries echoes of the corruption charges now swirling around the country, the preceding sentences suggest environment issues were on his mind.

Immediately after referring to phone-tapping, the Prime Minister told the meeting organised by the government and the CII: “Businesses, by their very definition, need to be profitable. But the manner in which they use natural resources and the extent to which they are sensitive to the needs and aspirations of the common man is also critical to their own long-term survival and growth.”

The Prime Minister then referred to the environment. “Sustainability of business therefore includes not merely economic sustainability in the narrow sense of the term but social and environmental sustainability as well. Indeed, financial capital needs human, social and ecological capital to be viable in the long-term sense of the term. Market activity that concentrates wealth without empowering the poor and the deprived is also unacceptable ethically.”

It was after this that Singh referred to the perception of ethical deficit. “I am sure our business leaders are aware that business practices of some corporate houses have recently come under intense public scrutiny for their perceived ethical deficit.”

Singh also mentioned the conflicting pulls and pressures of development and disruption of livelihood. “Our growth processes must not suffer because of loss of confidence in industrialisation and development. We need policies and interventions that would minimise livelihood disruptions. Affected populations must see a stake for themselves in transiting to alternative lifestyles. Long-term benefits to them must outweigh the immediate costs they may have to bear.”

The Prime Minister did return to the theme of ethics towards the end of his speech. “Finally, ethical and responsible behaviour needs to become the cornerstone of corporate behaviour, as indeed our national outlook… Our corporate culture must be attuned to the universally accepted values of good governance — accountability, transparency, responsibility and responsiveness to stake holders.”

Again, he uttered words that seemed to back Ramesh’s strict stand on environment regulation. “But just as overbearing controls stifle initiative, dogmatic adherence to extreme models of non-regulation can also be disruptive to sustainable growth. Ours is the middle path. We believe we must trust Corporate India as indeed you must trust us.”

Singh also sought to bind industry to the UPA’s signature plank. “I am sure Corporate India will contribute to our efforts to fulfil the dreams of the aam aadmi.”

Later, Ved Jain, past president of the Institute of Chartered Accountants of India, said: “What the Prime Minister is flagging is that there is a need to evolve systems to improve ethical standards… lower ethical standards in corporate behaviour poses costs to society and he wants them to be addressed even as he wants India Inc. to gain and be the driver of economic growth.”

Industry chamber Ficci said that “rent seeking” (the practice of reaping profits by selling off licences after acquiring them cheap) can damage the India story. “We believe that anybody found indulging in corrupt practices either as payee or recipient must be punished summarily in a fast tracked process,” it said.

“To preserve India’s robust image and keep the growth story intact, Ficci calls for transparency, accountability and probity in our system of governance. We urgently need rules and regulations that do not allow rent seeking,” Ficci president Rajan Bharti Mittal said.