Corporate Social Responsibility?

The Nano Goes to Modi’s Gujarat

The decision by the Tata group to re-locate the Nano plant in Sanand is of concern to liberal Gujaratis. The logic of business is to be competitive and profitable; as such, Tata’s move makes sense. The company was right to choose the business-friendly state and get down to the task of making the revolutionary Nano car, which promises to put India on the global map of the auto industry.

Nevertheless, it just does not sit comfortably with liberal sensibilities in the communally-polarized state. What’s more, the triumphal note that Gujarat chief minister Narendra Modi sounded at the media event to announce the pact appeared to be a new form of propaganda. He followed it up with a series of television interviews, resplendent in new sartorial style. In these interviews, Modi positioned himself as a spokesman for the new India.

Modi is a politician and, some might even argue, a cynical one. It doesn’t take rocket science to see through his new effort to buy respectability. Like Lady Macbeth, he is seeking desperately to wash the communal bloodstains off hands in order win national acceptability. He is positioning himself to emerge as a national leader in the BJP once L K Advani is gone.

We can explain away Modi’s posturing as the way of an ambitious and ruthless politician. What is more difficult to accept is Tata’s decision-making process. The Nano is Tata’s prestige project. It is plausible that the decision was made on the rebound after the embarrassment and the financial costs of the shenanigans at Singur in Bengal. Given the formidable reputation of Tata, did no one consider the possibility that the decision could sully that standing?

Tata has sizable commitments to corporate responsibility programs. They stem from the conviction of senior management that their methods of conducting business should be ethical; as such, they must take into account the interests of society. These laudable programs have won prestigious awards and wide recognition. The Nano project is also driven by the same larger vision: to provide affordable personal transport to the emergent middle class.

While some companies like The Body Shop and others are recognized for their socially conscious practices, others are disparaged and their efforts often dismissed as hollow public relations ploys to whitewash the ethical questions raised by their operations. For example, the tobacco and oil industries simply have been unable to deal with the core ethical questions.

For all the years that such companies have fretted about corporate social responsibility, their notion is largely a putative expense to divert attention from real and serious ethical issues surrounding their business. Milton Friedman made sense when he famously argued in an article written 38 years ago that “the social responsibility of business is to increase its profits.”

Friedman’s piece stirred a major controversy at the time. Not just his idea of corporate responsibility but all his work on monetary theory was dismissed as a handmaiden of powerful multinationals. It was the time of Woodstock and Viet Nam; big business in the West was viewed with glaring hostility in the media, in the academy and in the liberal mainstream. In India, given the socialist mindsets in politics and the bureaucracy of the time, business was seen a milk cow: favors and cash in exchange for licenses and permits.

With the dawn of the Reagan-Thatcher era, governments ceded space to the private sector. That was when views about corporate social responsibility began to change. If the private sector has unfettered access to markets, land, labor and capital, many scholars and analysts argued, companies must consider the larger social entity in their decision making.

In a recent example, a major infrastructure firm with far-flung projects served by casual labor included AIDS awareness and disaster management as part of its social responsibility initiative. It serves both the larger community and the company interests. Companies need to seek out areas where their operations intersect with the larger good.

Seen in that light, the Tata decision to re-locate the Nano plant in Gujarat raises many questions. Modi is like a chameleon in his relentless pursuit of power. Starting out as a fiery Muslim basher, he went on to pose as the champion of Gujarati pride; now he pushes himself as a business friendly leader. How does Tata reconcile its pact with Modi whose seven years as chief minister have been marked by overt targeting of minority groups? How can a company that has been honored by the US India Business Council sign on with a controversial politician who has been and continues to be denied a visa to the United States.

Modi’s culpability in the communal mayhem that followed the Godhra incident was clearly established; his effort to gain absolution by setting up the kangaroo Nanavati commission was clumsy. It’s in the past; he has turned a new leaf: the cheerleaders say. But who can forget that Modi built his political career by fanning the flames of religious bigotry with references to the conquest of India by the Mughals in medieval times and more recently, the Partition of British India into India and Pakistan

In the end, there is a growing belief that Tata’s move, though legitimate, helped Modi in his whitewash campaign to emerge as a national leader. As a result, this highly respected company’s commitment to social responsibility appears somewhat weaker.

an edited version of this piece appeared in the times of india, october 21, 2008