India's tight-fisted rich

Last Updated: Sat, Feb 23, 2013 19:10 hrs

In the nineteenth century, the United States was overrun with ruthless industrialists, the men who built the railways and cities and steel plants that would make the country a superpower. Their methods were not always ethical; they bribed and intimidated their way to the top in an era when regulators were toothless and government was sometimes on sale to the highest bidder. The parallel between that, America’s “Gilded Age” of robber barons and the period of crony capitalism and rapid growth that India is going through at the moment is often made. But one difference stands out, and that difference is encapsulated, perhaps, in the story of Andrew Carnegie. The United States’ most successful steelmaker, he built Pittsburgh into the heart of American industry, and when he sold his plants to J P Morgan, creating US Steel, for $480 million (over $7 billion in today's money) in 1901, he devoted the remaining years of his life to giving it away, saying he wanted to die poor. He failed, but narrowly. By the time he died, with only $30 million of that vast fortune left, he had endowed universities, public libraries, peace foundations and orchestras, and his name is remembered in every major American city even today. The contrast with India's rich and powerful is stark. But perhaps the move by Wipro head Azim Premji to transfer 12.5 per cent of Wipro, worth Rs 12,300 crore, to his non-profit foundation might mean that things are changing, and not a moment too soon.

Mr Premji has now, in total, given 20 per cent of Wipro to the Azim Premji Foundation. This recent tranche of shares is in response, it seems, to the “Giving Pledge” being promoted by two of the world’s richest men, the investor Warren Buffett and Microsoft founder Bill Gates. Both those men, too, have followed the tradition, so strong in American capitalism, of giving away the wealth they have accumulated in their lifetimes to socially conscious causes, and have urged the new rich in emerging Asia as well to follow a similar path. Mr Gates, in fact, might be remembered more, a generation from now, for his efforts towards stamping out malaria and AIDS in Africa, and for revolutionising how non-profits do their work, than for anything he did in the world of business or information technology. But Indian business leaders have largely failed to follow this trend, with several studies suggesting they give away less of their accumulated wealth than do those in comparable countries — a fact that reflects poorly on this country’s ability to shape civic-minded business and public leaders.

Yet Mr Premji’s actions — and with him those of some of Infosys’ co-founders — suggest another reason for Indian tycoons’ apparent stinginess. Mr Premji took the cooking oil company he found and transformed it into one of the symbols of India's economic rise; he perhaps feels he owes as much to the country as he does to his family. Much of rest of India’s business leadership probably view themselves, instead, as stewards of family wealth, which they have no right to give away from the family. Whatever is given away — to temples and religious foundations, frequently — is done primarily with the family’s good name in mind. This is disheartening in one way, for it means that Mr Premji and his IT peers will likely continue to be exceptions in a business class that will continue to see no reason to give back most of their wealth to the wider community. On the other hand, it reveals once again how the transformation of India Inc from a largely family-run, family-held set of enterprises to one that is more open — including to men coming, like Andrew Carnegie, off the shop floor — might have even more positive effects than have hitherto been imagined.

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