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Are India's rich not philanthropic enough?

Soutik Biswas | 15:25 UK time, Tuesday, 7 December 2010

Azim Premji

He has been called India's reluctant billionaire. There are many stories of publicity-shy software tycoon Azim Premji's frugal habits - flying economy class; taking an auto-rickshaw from the airport after not finding his car; borrowing magazines from the company library and living on its campus.


So it was not surprising when Mr Premji announced last week that he would donate nearly $2bn (£1.3bn) to fund rural education and development programmes in India. He may be - as Forbes magazine reckons - the third richest Indian and the 28th richest person in the world, with an estimated net worth of more than $17bn (£11bn). But he has also been seen as a model of a businessman of great rectitude. His Bangalore-based Wipro employs almost 100,000 people worldwide, and is one of India's most respected companies.

Mr Premji remains an exception in the world of Indian business. India has some 60 billionaires. The wealth of its top 10 billionaires equals 12% of its GDP, compared to just 1% in China, 5% in Brazil and 9% in Russia. The combined net worth of India's 100 wealthiest people is about a quarter of its GDP. But the philanthropic record of India's rich is patchy.

A few like the Tatas - who built and run the city of Jamshedpur and have a decent record in what is called corporate social responsibility - appear to have been more generous than the others. In recent years, India's billionaires have given away money to their alma mater, mostly foreign universities. A mobile phone giant has set up a foundation for underprivileged children; a tyre company has invested in containing HIV/Aids. The chairman of a leading software company has said he would set aside 10% of his wealth for philanthropy. A tea company has adopted several hundred villages. But one suspects that it all does not add up to much, considering the enormous concentration of wealth in the hands of India's rich and the power they wield.

Are Indians then too greedy to be philanthropic? Americans, for example, are known to be generous, giving away some $300bn - or 2% of the nation's GDP - to charity. There are no figures available for India - a much poorer country - but I am sure they will not be anywhere close.

I don't think some people are hardwired for altruism and others aren't - an act of charity is often spurred by an incentive of publicity and media coverage. Readers always responded handsomely whenever a magazine I used to work with launched a donation drive following a devastating flood or an earthquake. "You give not only because you want to help but because it makes you look good, or feel good, or perhaps feel less bad," write economist Steven Levitt and journalist Stephen Dubner in SuperFreakonomics. So, traditionally, India's businessmen have felt that they have contributed enough to society by giving away a lot of money towards building temples.

Many believe that India's rich are not generous enough and flaunt their wealth vulgarly in a country where the majority are poor. One reason could be that most Indian businesses are run by families and have mercantile origins. Prime Minister Manmohan Singh once appealed to businessmen to share their profits with the common man, maximise profits "within levels of decency" and refrain from ostentatious displays of wealth because such "vulgarity insults the poor". Gurcharan Das, a writer and management guru who has worked with some of India's top companies, believes that Indian capitalism has begun to flower in the past few decades and wealth is "now being created" in plenty. He believes that the rich will begin to contribute to social causes in a big way soon, and Mr Premji's $2bn charity for education sets an "important" precedent. Time will tell whether Mr Das is being too optimistic.

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