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THEY CALL IT PHILANTHROPY, I CALL IT BUSINESS SENSE!

Post liberalization, India has not only witnessed tremendous economic growth, but has also experienced something which was more of a distant dream preliberalization. With stock markets surging northwards, India Inc. has been all set to storm the lists that feature the “-est” of the world, both in terms of scale and scope. Not only did the Indian economy, within a span of less than two decades, touch the trillion dollar mark, but at the same time, India Inc also booked their slots in the Fortune 500 and Forbes lists with unprecedented frequency. However, such entries did not change the attitude of these Indian corporations towards social cause. Unlike the West (and even China, Hong Kong and other Asian countries), Indian billionaires largely kept themselves away from the whole idea of philanthropy. This is quite evident from the fact that in spite of the surging number of billionaires, the fate of our workforces has not changed much. Else, how can one justify India’s Gini coefficient (an economic indicator that indicates the income inequality of the nation) of 36.8, which is even worse than Pakistan and Bangladesh.

The Asia-Pacific Wealth Report developed by Capgemini and Merrill Lynch Wealth Management reveals that in 2008, India had 84,000 HNWIs (High Net Worth Individuals) with a combined net worth of a staggering $310 billion (equates to approximately Rs 14,000 billion) with each HNWI on an average maintaining a balance of Rs 166 million – or more than $3.6 million. In 2009, the number of HNWIs grew and crossed the mark of a hundred thousand; and today, the same is estimated to be around 127,000. For the uninitiated, HNWIs are those who have assets of $1 million or more, excluding primary residence, collectibles, consumables, and consumer durables. To top this up, Forbes’ magazine lists around 69 Indians as billionaires, with the net worth of 100 wealthiest Indians being estimated at $300 billion as of 2009.

Now, to get a better perspective of the huge disparity, one just needs to compare this prosperity at the top of the pyramid with the misery at the bottom. The average Indian currently earns $1030 annually (the latest per capita figure). If one were to assume that everyone in India is caught in a time warp wherein the current billionaires’ wealth does not grow beyond the current levels, and at the same time those at the bottom do not spend a single penny for the next many years, then it would take more than 970 years for the average per capita earning Indian to even catch up with the current billionaires! With such high income disparities, if the top 100 HNWIs decide to donate merely 1 per cent of their total wealth, they could add around $3 billion every year to the economy, which could then fund a huge amount for basic developmental initiatives, which the average Indian is devoid of.

Again, to get a perspective of what this money can do, it is significant to understand how much does the government earmark for social imperatives. With the government planning to spend $6.72 billion in education and $4.83 billion on health & family welfare this budget, such a donation as mentioned above would go a long way in comfortably enhancing the allocation towards these social imperatives. Thus, a single year of donation can double and in some cases even triple the flow of funds, depending on the sector! If not for anything else, this $3 billion, which is a mere one year’s donation for India’s richest, can take care of the sanitation problems of 700 million Indians for good! And all this without causing much dent to the personal wealth of these top 100 wealthiest Indians. And mind you, here we are just referring to one year of donation; imagine the magic it could create if this trend of donations could continue for perpetuity. Also, here we are referring to just the top 100 of India’s wealthiest; imagine the social revolution that could be brought about if all 127,000 HNWIs donated 1% of their wealth every year for social development!

Going by the way that India and Indian companies are making their positions formidable in various esteemed lists, it is very important for them to model their commitments in the way today’s global companies view their duty towards society. If not for anything else, at least for all selfish reasons, because it is time for India’s wealthiest to awaken to the fact that donating is not just about philanthropy, it makes good business sense too. A healthy, educated and a well endowed society is a future market. And a 1% contribution to create this huge market is definitely a worthy investment!

Comments

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shwetanshu said…
awesome.....You keep on hitting bulls eye every time........
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Aman Baghel said…
sir i like the donation-by-rich idea, and now i'm pensive as the book
"rich dad poor dad" suggest that by way of distributing money we can not make the poor prosper.
i think we need to create an environment where people start thinking about growing without having grudges about all petty issues. we have to stop playing the blame game. we have to encourage creativity. and of course Govt. has to be ready with every possible equipments to aid all such PASSIONATE INDIANS.
Bhagwan said…
Mr chaudhary ,I am very convinced with the Aman Baghel, I dont think that charity is the solution of problems any where, we just need need to make the proper allocations of our assets... Spending 70,000 crores on CWG, what do you say , its an development or hellucination of reputation or...simply corruption. Hence its better, we have to focus on resourses, asset allocation and utilization than charity and philanthropy, .....to bring down the Gini co-efficient.
rkumar said…
thanks
u have written my heart out.today the worker who sweats and bleeds to make his owner billionare is devoid of his basic amenities, specially the shelter.
the costs of these propery market is skyrocketting. on approaching for loan papers the builder provides those of half of the price asked by the builder.
there is no price tag system in this market.each property owner has his own price tag.there no ruling from the govenment side.this is perhaps the only market where without ruling over pricing.
this donation u mentioned in your article may go a long way in creating this infra for these woking class of those heartless billionares.
in your next article i would like u to shed some light on this lawless market of real estate which doesn't seems so real but only an illusion.
paul said…
Great article sir! Well, many argue that charity is not the solution; here too as few friends have said, distributing money is not a solution for reducing poverty. Well, charity is not about distributing money, it’s about investing the charity funds on the right areas, where long term investments would yield future benefits say education, hospitals (where free services can be provided), encouraging small businesses/entrepreneurship run by underprivileged communities or individuals and many more, at the same time, funds should also be diverted to meet short-term needs like medical aid, food supply to poverty stricken areas etc.

Mr.Shiv Nadar has pledged 10% of his wealth to charity and he says his focus would be education. Bill Gates, Melinda Gates and Warren Buffet have started a Massive Charity campaign in United States and they have pledged most of the part of their wealth for charity and they appeal to other billionaires in the US to pledge atleast 50% of their net worth of wealth to charity, till now 38 billionaires have pledged for the cause and they expect others to respond. Bill Gates also plans to come to India with the charity campaign… will the Indian billionaire community respond?
vanamali said…
Hello Mr.Chaudhuri,I appreciate the very point of having business sense.But I feel this 1% that you have mentioned has an obstacle called government.Given the fact that 60% of the welfare funds go unnoticed from our so-called government agencies,I feel this might not be a good idea as these valuable corporate social funds just end up increasing the gdp of the corrupt wealth in foreign banks. So as an Indian I feel these funds which the fortune hundred Indians donate should be spent righteously by the respective companies itself.It can be used for construction and maintenance of proper educational centers, either individually or collectively(I mean to say these 100 businessmen can form their own organization collectively for handling such funds) and use it to adopt our down trodden villages and can be spent on their well being without government's interference. This sense of donation is neither philanthropy nor nor business sense. I call it social sense.
I really loved your article Sir...
Hope to see your reflection on my view point...
Thank you
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