Financial Daily from THE HINDU group of publications
Monday, Nov 14, 2005
Columns - Vision 2020
For a win-win business plan
P. V. Indiresan
As pointed out in the previous article, the software industry can be faulted on three counts:
(a) It has mislocated it has located its businesses in such a way that there is too little residential, public, or waste disposal space (let alone charity space for the poor).
(b) The manner it compensates the farmers causes heart-burns among the dispossessed.
(c) It has no option but to pay high salaries, and they cause collateral damage to others.
The previous article received the highest reader response ever to this series of articles. I am surprised at the extent of bitterness that Bangaloreans seem to have towards the IT industry. The industry would do well to introspect but it appears it is no mood to do so. Software industry pays fabulous salaries. Unfortunately, excessive wages create peculiar problems of their own. They raise prices of all consumer goods, from vegetables to house rents beyond the means of others. In effect, they reduce the purchasing power of money, and the ability of the community to pay for goods and services. High wages increase average incomes but not equity. At the height of Reagonomics, experts concluded that there is a trade-off between growth and equity, that one can have one or the other but not both. Nowadays, the expert view has changed. Combining equity with growth is the theme of the latest report of the World Bank.
In a well-ordered polity, employers discharge their Corporate Social Responsibility merely by paying their staff the highest wage possible. In that scenario, employers pay high wages; employees spend more and the state collects larger tax amounts from both employers and employees. With increased revenues, the state improves the environment.
Unfortunately, India does not enjoy good governance. If the government had been good at town planning, the software industry would not have created for itself and others the kind of problems it has. If the government had looked after the poor, there would have been no complaints that rich businesses hurt the poor. Because our governments are less than competent, the onus on Indian businessmen is greater than elsewhere. They have to take on themselves responsibilities that are usually left to civic authorities.
The IT industry in Bangalore has indeed attempted to improve civic affairs by patronising the Janagraha movement.
However, Janagraha addresses only problems inherited from the past; it does not research how such problems may be prevented from recurring. It is not enough to correct past mistakes; we should prevent such mistakes from being repeated.
In the present instance, because both the government and the political leadership failed, it is incumbent on business to evolve (a) better town planning, (b) better promotion of equity, and (c) better compensation package for farmers.
Admittedly, no business can substitute for what the state should do. However, large businesses can act as catalysts for good governance. They can promote research on public-private partnership for better governance. Large industries have some freedom of location too. They can keep away from places where good town planning is impossible.
Town planning is the art of zoning space in such a manner that people can live, work, travel and enjoy leisure in comfort. Our governments are particularly inept in this field. Not one town or city in the country can boast of even minimum quality. It appears that our town planning skills collapsed along with Mohenjo Daro and has not recovered to this day even after 4000 years.
In the matter of civic responsibility, we suffer from a peculiar cultural blemish.
Personally, we are among the cleanest in the world. We are also the worst in the matter of civic sense. Throwing garbage in front of our own door, defecating in public is second nature to us. That must be the reason why even small IT establishments are fabulous inside and even large ones are surrounded by filth.
As civic responsibility is not high on our cultural agenda, we do not bother to learn lessons from bitter experiences. For years, the IT industry has been crying hoarse about the collapse of civic amenities in Bangalore. The same entrepreneurs are now happily expanding their business on the Old Mahabalipuram Road in Chennai and in the Hi-tec City in Hyderabad. It requires no genius to tell them that the mess that we see in Bangalore today will be repeated in Chennai and in Hyderabad tomorrow.
If the IT industry has any foresight, it will politely and firmly resist all offers to locate its businesses in crowded areas or where there is no place in the neighbourhood for employees to reside. It would also check that ample space is reserved not merely for the current use and future expansion of its own business but also for employee-residences, for public and social services, as well as for recreation. In particular, it would take care that there is enough space for the unorganised and informal activities (and their workers) that will automatically emerge along with big business for the mutual benefit of both.
Succumbing to the baits that governments offer to locate close to congested cities and turning a blind eye to the consequences of taking such baits is not Corporate Social Responsibility.
Undoubtedly, small companies cannot afford to be choosy, but very large ones can. They can even garner larger profits by doing so. Mr Deve Gowda has criticised Mr Narayana Murthy for asking the government for 687 acres. The former Prime Minister should have complained not that Mr Narayana Murthy is asking too much land but that he is asking too little. He should have demanded that Mr Narayana Murthy take not 687 acres but 6870 acres and make that space good and useful for the rich and the poor alike, transform a truly rural area into a modern habitat as attractive and as prosperous as Bangalore is but without its congestion and civic tribulations.
However, there is a catch. Both entrepreneurs and politicians rightfully complain that farmers are uncooperative and getting land from them is almost an impossible task. They are both right and wrong. They are right insofar as farmers stoutly resist take over of their land. They are also wrong because what farmers object to is not the take over but the unfair compensation that is given to them. The logical response is not to run away from the responsibility of developing quality habitats but making such an exercise attractive for farmers too.
Modern large businesses (not IT industry alone) can remedy all three illnesses that Bangalore is suffering from: It can pay large salaries without incurring unmanageable envy, it can expand without making living conditions impossible and it can make farmers too happy and contented.
How to make such an exercise financially self-supporting and also promotable by private business is the challenge.
(To be concluded)
(The author is a former Director of IIT Madras. Response may be sent to: firstname.lastname@example.org)
(This is 162nd in the Vision 2020 series. The previous article was published on October 31.)
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