Of givers and takers

Of givers and takers

In recent days Warren Buffett, the legendary investor from the US and Bill Gates, the former chairman of Microsoft Corp., have been to India. There have been renewed calls for business leaders to give more and do more for the poor and underprivileged. There have been hostile voices, too, ones questioning the role of philanthropy and saying that it is nothing more than the “guilt of corporate greed" throwing a few pennies and then getting back to making money.

At the face of it, such arguments have a ring of plausibility around them. For an economy growing by leaps and bounds, Indian firms contribute much less than 1% of the country’s gross domestic product (GDP) in charity. Could there be anything more shameful?

This is an old confusion. Firms, by definition, are involved in making profits. What they give—over and above their profits—is the happy end called charity. They are under no obligation—save moral suasion—to share their profits with societies in which they operate, either directly or through the government. If they are made to do so, that would only amount to greater taxation. Even then, if you ask any big Indian firm if it would be willing to fund social projects—directly without government intervention—the answer, in most instances, is likely to be positive.

The problem, whether viewed in terms of the quantum of charity or through their willingness to give, lies somewhere else: where (and what) are the incentives for “giving" in India? It may sound counterintuitive, but the single biggest disincentive to philanthropy—especially at the individual business and small firm level—is corruption. While there are no formal studies comparing what an average firm “gives" and what is “taken" from it by corrupt government functionaries, it would not be surprising if taking is much greater than giving. While this imbalance is much more acute at the level of small firms, big corporations are not immune from it either.

Firms and businessmen make an easy target in this respect. In India, the decades of socialist ideology still render profit a dirty word. At the same time, while there is widespread condemnation of official and political corruption, it still does not have the moral opprobrium that is generated by companies making profits. Firms, in the end, can only do that much. Their job is not to crusade against the ills and shortcomings that ail society at large. If that were to be done, it would lead to their assuming a political role, something reserved for others.

Are Indian firms stingy in philanthropic terms? Tell us at views@livemint.com