Mainstreaming Stakeholder Participation for Inclusive Growth and Development of Indian Corporate Sector
With the economic reforms that were initiated during the 80s and were further given a new direction in the current decade, the Indian corporate sector has been growing at a rapid pace and has become increasingly integrated with the global economy. While the last decade of the previous millennium had witnessed large scale investments by foreign companies in India, the current decade has witnessed the Indian companies invest substantially in other countries. This decade also witnessed a sustained high growth and the corporate sector becoming the main driver of the growth of Indian economy.
The current decade has also seen an increasingly sharp focus on the national and global challenges related to underdevelopment, disparities, sustainability and non-inclusion. Therefore, while on one hand, the corporate sector expects a regulatory and service delivery framework which helps it to sustain its growth, the stakeholders are increasingly demanding that the functioning of the corporate sector should become more inclusive and responsible. In this context, the Ministry of Corporate Affairs has brought a new paradigm in its functioning by mainstreaming stakeholder participation in all the initiatives undertaken by it.
At the first level, the Ministry has adopted two new mottos to guide its functioning so that the concerns and expectations of the corporate sector as well as the stakeholders can be duly taken into account while designing its initiatives. These mottos are “Corporate Growth through Enlightened Regulations” and “Corporate Sector and Inclusive Growth”. In this direction, the Ministry formulated and released the Voluntary Guidelines on Corporate Governance and Corporate Social Responsibility in December 2009. These guidelines were prepared after wide consultations with the stakeholders. While the Voluntary Guidelines on Corporate Governance raise the bar with respect to the internal governance of the company, the Voluntary Guidelines on Corporate Social Responsibility encourage the companies to address various concerns related to the environmental and social impacts of their functioning and contribute to the well being of the society. These voluntary guidelines are issued on the “comply or explain” principle. The Ministry will also be revising these guidelines on the basis of the experience with respect to their uptake and adoption by the corporate sector.
In order to mainstream the role of corporate sector in the overall social and economic development of the country, the Ministry organized the India Corporate Week was organized in December 2009 with the theme “Corporate Sector and Inclusive Growth”. 124 programmes were organized throughout the country during this week to show-case the above theme in partnership with the trade and industry chambers, Professional Institutes and other organizations. During these programmes the stakeholders, including common people, were exposed to the initiatives of the Ministry, the role of corporate sector and the contribution made by it for improving the economic and social development of the people. With these programmes, the Ministry was able to bring together the regulatory authorities, corporate sector, professionals and a number of other stakeholders on a single platform so that they can collaborate and work together on common issues.
While bringing the stakeholders together, it was felt that it is important to integrate the common man with the corporate economy through informed investments. The participation of Indian people in the corporate economy through various investment instruments has been low as compared to some of the developed countries. While on one hand, the corporate sector needs more investments to grow, on the other hand, substantial household savings are available with the Indian people which do not find a channel of getting invested into the corporate economy. In order to bridge this gap, the Ministry has up-scaled its investor awareness programmes by bringing about a ten-fold increase in the number of programmes from 300 in the previous year to 3000 in the current year.
The Ministry has also organized the India Investor Week in July 2010 in partnership with a large number of organizations to bring a national focus on this important area of nation building. The theme of the India Investor Week has been chosen as “Informed Investor – An Asset to the Corporate India”. These partner organizations include Confederation of Indian Industry; FICCI; ASSOCHAM; All India Management Association (AIMA); The Federation of Andhra Pradesh Chamber of Commerce and Industry; The Southern India Chamber of Commerce and Industry; Indian Merchant Chamber; PHD Chamber; All India Association of Industries(AIAI); Bombay Stock Exchange; Institute of Chartered Accountants of India; Institute of Company Secretaries of India; Institute of Cost and Works Accountants of India; MCX Stock Exchange; National Stock Exchange; Reserve Bank of India; Securities Exchange Board of India and UTI Mutual Fund.
Through these initiatives undertaken during the last 10 months, the Ministry has transformed its functioning to make stakeholder engagement as the mainstay of its functioning. This engagement is also bringing a new awareness in the corporate sector on their role in the larger content of social and economic development of the country.