The prime minister has a point

Much righteous indignation has been expended on Prime Minister Manmohan Singh's strictures to India Inc about the need for socially responsible behaviour. Judging from the barrage of reaction over the weekend, Singh had clearly touched a collective nerve.

His comments, delivered at the CII's annual general meeting last week, were treated with almost the same chagrin as the American establishment greeted Alexander Solzhenitsyn's famous blunt censure of western society in his 1978 address to Harvard soon after the US granted him asylum.

Solzhenitsyn, of course, was behaving with the innocence of forthright sincerity. It is always difficult to accuse Manmohan Singh of inauthenticity. No doubt he believed what he said and he has the credentials to take the high moral ground.

It must have also been obvious to his auditors that he was paying due obeisance to his mid-term coalition government's political commitments. Certainly, his '10-Point Social Charter' reads like a classic politician's Utopian wishlist.

It would, however, be equally incorrect to dismiss the prime minister's plain speaking as mere politic-speak. That he had ample scope to vent this agenda was partly a result of the opportunity presented by the theme of the AGM -- inclusive growth -- chosen, no doubt, for its political correctness. But it is also true that corporate behaviour has left itself wide open to such criticisms.

In fact, the prime minister's speech had an overall message that should have India Inc thinking rather than smarting. Reading through it suggests that India Inc may be winning the battle for growth and efficiency, but not the battle of public perception. Much of this has been overlooked in the disproportionate focus on Singh's comments about CEO compensation in that speech.

The prime minister's speech, however flawed, reflects a view outside of a minority in the big cities. Whether it is land acquisition for mega-projects, environmental degradation or poor service delivery, India's corporate world -- and this includes foreign companies operating here -- has done little to earn public trust.

Of course, it would be grossly unfair to impute all the current ills that beset India to the fell hand of corporate activity. Some of them -- like growing inequality -- are the inevitable consequences of growth anywhere in the world. Others -- like our abysmal social indicators -- are a result of poor public delivery mechanisms.

Yet, public perception matters, as corporation after corporation trying to gain footholds in the oil-rich countries of Nigeria and Iraq have discovered.

This is something L N Mittal, with wide experience of operating in emerging markets, has learnt. His plans for a 12-million-tonne steel plant in the eastern state of Orissa, for which land acquisition has begun, have been preceded by announcements, widely circulated by his publicity machine, to set up schools, hospitals and even a soccer academy in the area.

Mittal's actions reflect a growing trend. Corporate social responsibility is becoming a larger part of the corporate agenda and is attracting more attention from the C-suite than ever before. Indeed, CSR has long gone beyond the tax-planning activity to which Singh referred because corporations understand the need for a kinder, gentler image in the interests of good business.

But it is uncertain how far big-bang schemes such as financing hospitals and schools, contributing to the Missionaries of Charity or addressing Prahaladian bottom-of-the-pyramid issues convince anyone.

Certainly, no one would advise them not to do these things. But the efforts are often flawed by the strenuous publicity that accompanies them. Too often clients demand CSR programmes from their public relations consultants that have a "strategic fit" with their image, irrespective of the community's needs. This often leads to amusing situations where companies accused of selling sub-optimal products install plastic garbage bins in city parks by way of an antidote.

Yet others commandeer wide coverage of local health programmes or "empowerment" in areas around their factories. No Press releases are issued when the same programmes are abandoned because (a) the money runs out; or (b) the objective of acquiring a government clearance had been achieved. No journalist ever enquires after the fate of the beneficiaries of temporary corporate largesse.

To be fair, the battle for public perception is a tough one to win and there are no hard and fast rules. Some winners are rooted in history -- the Tatas, Birlas and Bajajs, for instance, have developed a long-range credibility derived from their nationalistic roots. Others -- like Infosys -- derive their successful images from their founders. But they are the notable exceptions.

So the prime minister is probably right when he exhorts the corporate world to rethink its terms of engagement in a society as poor and in as much flux as India. At any rate, it might be worthwhile for corporations to congratulate themselves a little less on their transformational impact on Indian society.