New Delhi: Lack of transparency and accessibility to concerned authorities emerged as the most severe stumbling blocks in the growth plans of corporates at the “National Conclave on Corporate Governance in India: Transforming Business Environment.” Captains of industry participated in a dialogue which followed a presentation made by Anurag Goel, Secretary, Ministry of Corporate Affairs. Edited excerpts:
The theme is topical and covers a host of issues which impact not only Indian corporates but economic growth of the country as well. These issues range from the global economy, international trade, competition, technology, legal frame-work, regulation to corporate culture, corporate social responsibility, leadership and management styles.
A business environment must encourage, nurture and support established, as well as new businesses. These must be allowed to flourish, prosper and contribute to the economy so as to achieve a double-digit growth rate.
India’s strengths must be capitalized
India is regarded very highly around the world today.This is an opportunity we have created for ourselves, and one which we must capitalize fully. Business sector is capable, confident and aggressive. Our management skills are recognized as superior, and more and more Indians, and people of Indian origin abroad, are being invited to occupy important positions on the boards of the world’s biggest companies. Sometimes it is said, half jokingly, that you cannot really have a top class Board without having an Indian on board.
Liberalization heralded a new era
The precarious position of early 90’s has been reversed. This has been made possible due to foresight of those who brought in liberalization, and the capability and dynamism of those who made full use of the new environment.
This partnership between the Government and corporates, fully supported by professionals, continues to be one of the most important forces in transforming the business environment in the country.
Vision of ministry of corporate affairs
The key words ‘partnership’ and ‘effective corporate functioning’ are key phrases in the vision statement. The Ministry would like to be available to the corporates for lending a helping hand in any way that helps to make corporates more effective vehicles of economic growth. It catalyzes India’s rise to the status of an economic super power.
Transparent and pro-active administrative systems
Trust, transparency and self-regulation will bolster business and economic growth. Attempt is made to provide necessary legislative and policy framework in a pro-active manner, so that business does not have to wait for a law or policy after it’s need is felt, but finds that this need has already been anticipated and met.
Legistlative initiatives taken by the ministry
* Amendment to the Acts governing professional services and institutes: Professionals like Chartered Accountants, Cost Accountants and Company Secretaries, who provide a range of services to corporate entities, play an important role in the functioning of corporate entities.
* Notification of Accounting Standards: These provide a common business language which translates corporate happenings into financial terms and enables comparative analysis.
* Revising Company Law: Following recommendations of the Irani Committee, the legislative drafting of the revised Company Law is nearing completion. We are making all efforts to introduce this Bill during the Winter Session of the Parliament.
* Limited Liability Partnership: Limited Liability Partnership Bill, 2006 was introduced in the Parliament in December, 2006. The Bill referred to the Standing Committee on Finance. LLP is a new corporate form that combines the limited liability feature of the companies with the internal operational flexibility of firms. It would, inter alia, enable professional / technical expertise and initiative to combine with financial risk taking capacity in an innovative and efficient manner.
* Review and Amendment of Indian Depository Receipts (IDRs) Rules: This has been done with a view to provide liberalized facility for issue of IDR by foreign companies. .
MCA-21 which is the e-governance project launched by the government won the Dataquest IT Pathbreaker Award for 2006.
A CFO survey commissioned by Ernst & Young, received whole hearted support of the initiative with 92% CEOs / CFOs surveyed, demanding more e-initiatives of this kind.
Recognizing intense competitive business environment, stakeholders need access to knowledge and information, in a manner that is easily comprehensible and usable. A sophisticated knowledge management infrastructure in the Ministry would expand to meet requirements of all stakeholders.
Physical infrastructure has also been given a makeover with ‘corporate bhavans’ that look like any of the top leading corporate houses
State-of-the-art research and training facilities are being met through establishment of an institute by the Ministry. Named the ‘Indian Institute of Corporate Affairs’ (IICA), this institute would be a think-tank for the Ministry, and would provide high quality training to its officials. The intention is to make it a world class institute, and one where partnerships can be developed with some of the best institutes in the world. Some institutes and universities in Europe and USA have already shown interest and premier Indian institutes are also being approached.
Ihe institute would cover important issues which impinge on effectiveness of corporate functioning, including corporate laws, economics, accounting, emerging technologies etc. Focus would be on action learning and applied knowledge. IICA would have Centres exclusively tasked with issues relating to partnership with corporates, corporate governance and investor protection.
11th Five year plan
IICA has been included in the 11th Five Year Plan, at an estimated cost of Rs. 211 crore. An amount of Rs.47 crore has been provided in the current years’ budget. The location has been decided, and earmarked in consultation with local authorities.
Investing in human resources
Rebuilding and restructuring the Indian Company Law Service is a priority. The Ministry will fully assist Indian Corporate World in transforming the business environment, and at the same time following the highest ethical standards and corporate social responsibility practices.
Members of industry are encouraged to give free and frank feedback on the various initiatives, which would also be the subject of discussion in the subsequent sessions in which two Joint Secretaries from the Ministry would be participating. This would further help us to walk on the path of economic growth in partnership with our stakeholders, in tune with their perceptions and needs.