ethics in india vm(2)

7/29/2019 Ethics in India vM(2)

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ETHICS IN

INDIA ANOVERVIEW

Thoughts on Ethics in India and

the way forward for building

Indias ethical foundation


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Ethics in India an

overview

Ethics is to know the

difference between what you

can do and what is right


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EXECUTIVE SUMMARY

Why did the Greek and Roman civilizations vanish? Asked my Professor

at Lady Shri Ram College. Even as we grappled with potential answers,

she gave the enlightening answer,they vanished, because their values

vanished from them.

Ethics as a subject has crept into the Indian culture and philosophy

through generations. While basic values are beautifully captured in the

Indian epics, there is also a realistic representation of dilemmas. Too


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many times, in real life, the dilemmas end up with a jugaad solution

something that finds a path of least resistance to a quick fix solution.

While traditional perusal of the scriptures built the initial value foundation

of the Indian society, the current generation of Indians faces challenges

of a different level. The termite called corruption has hollowed the

nation; unethical decisions have compromised some of our largest

business.

It is the premise of this paper that much more than a legal framework

reform is required to address the crisis in ethics in India and elsewhere.

To address the issue of corruption, we need to build a moral foundation

for India. Ethics training is fundamental to the process, discussions and

case-studies will make a good start for the next generation. However, it

will need to go far beyond academic training ethics will have to be

learnt in the school of real life.

The very process of discussion about the moral propositions can actually

start a process of self-awareness that distinguishes between right and


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wrong. However, we can tend to distort the interpretation to suit our

convenience, limited perhaps by limits of our own conviction of an action.

(Airley)

Corruption is an extreme outcome of capitulating to the temptation.

However, ethics by definition is a far larger subject than an isolated

fraud or corrupt act.

Many people tend to equate ethics with religion. But one should not

identify ethics with religion. Most religions, of course, advocate high

ethical standards. Yet if ethics were confined to religion, then ethics

would apply only to religious people. But ethics applies as much to the

behavior of the atheist as to that of the devout religious person. Religion

can set high ethical standards and can provide intense motivations for

ethical behavior. Ethics, however, cannot be confined to religion nor is it

the same as religion (Manuel Velasquez).

Being ethical is also not the same as following the law. The law often

incorporates ethical standards to which most citizens subscribe. But laws


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can deviate from what is ethical. American pre-Civil War slavery laws and

the old apartheid laws of present-day South Africa are grotesquely

obvious examples of laws that deviate from what is ethical.

Finally, being ethical is not necessarily the same as doing "whatever

society accepts." In any society, most people accept standards that are, in

fact, ethical. But standards of behavior in society can deviate from what is

ethical. An entire society can become ethically corrupt. Nazi Germany is a

good example of a morally corrupt society.

What, then, is ethics? Ethics is two things. First, ethics refers to well-

founded standards of right and wrong that prescribe what humans ought

to do, usually in terms of rights, obligations, benefits to society, fairness,

or specific virtues. Ethics, for example, refers to those standards that

impose the reasonable obligations to refrain from rape, stealing, murder,

assault, slander, and fraud. Ethical standards also include those that

enjoin virtues of honesty, compassion, and loyalty. And, ethical standards

include standards relating to rights, such as the right to life, the right to


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freedom from injury, and the right to privacy. Such standards are

adequate standards of ethics because they are supported by consistent

and well-founded reasons.

Secondly, ethics refers to the study and development of one's ethical

standards (Manuel Velasquez). As mentioned above, laws and social norms can

deviate from what is ethical. So it is necessary to constantly examine

one's standards to ensure that they are reasonable and well-founded.

Ethics also means, then, the continuous effort of studying our own moral

beliefs and our moral conduct, and striving to ensure that we, and the

institutions we help to shape, live up to standards that are reasonable

and solidly-based.

In the following pages, we share the learning from the Indian epics and

the dilemmas faced by the characters. We explore a few select cases from

the Indian industry and analyze their ethical perspectives to reiterate the

importance of ethics and the way forward for India in this context.

ETHICS IN INDIAN CULTURE


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Indias rich cultural heritage has captured the debate of good and bad,

right and wrong in its epics, the Ramayana and the Mahabharata. The

two great concepts that have a bearing on ethics, contained in the Vedas

are the Rita, the law of God, or the eternal law Satya, the truth.

The Ramayana projects the ideal man, the ideal wife, the ideal brother

and the ideal servant, and Rama himself is held up as the very image of

Dharma. The Mahabharata is a veritable treasurable of moral maxims

which characters like Bhishma, Yudhisthira and Vidura expound on

occasions.(Sivaramakrishnan)

The Bhagwad Gita details the moral principles and Krishna expounds

them as the supreme Lord..distinguishing between the virtues and vices.

Yet, Indian literary history fully embraces the concept of noble ends

justifying dubious means. (Business vs ethics: The Indian trade-off, 2012) Three texts

intrinsic to Indian culture and philosophy help to explain the current

business landscape: the epics Ramayanaand Mahabarataand the


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economic treatise Arthshastra. The epics explore both sides of the ethical

coin, developing the dilemmas through short stories or allegories, all part

of an episode in a compendium spanning several lifetimes of different

characters.

In both the Ramayanaand the Mahabharata, even gods resort to deceit

and trickery to accomplish their ends. In the latter, Lord Krishna

repeatedly devises "underhanded" methods to defeat the opposing army

-- going so far as to encourage the protagonist, Arjuna, to attack and kill

an unarmed adversary.

In addition, the Arthshastrais often cited publicly by prominent

politicians and businessmen as the foundation of their strategic thought.

Written to advise a king on statecraft, economic policy and military

strategy, the work advocates the use of deception and sometimes brutal

measures for the common good. Max Weber described Machiavelli's

draconian Princeas harmless when compared to Arthshastra, whose


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topics range from "when a nation should violate a treaty and invade" to

"when killing domestic opponents is wise."

The existence of two different perspectives in these scriptures builds the

conflict between the right, perceived right and wrong! Fact is, the

scriptures capture a story and time pervasive human dilemmas and to

some extent have to be understood in the time context they were created

in.

THE LEARNING OF ETHICS FROM THE EPICS

Gurucharan Dass exploration of Mahabharata (Das, 2009) delivers an

interesting compendium of ethics in the epics. Specifically, there are

three threads that evolve in the analysis.


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Mahabharata explores this role of dharma throughYudhisthira,

Draupadi and other key characters in their discussions across various

allegories across the epic:

Religious reasons a person will go to heaven if he is good

Law of Karma - human deeds will inevitably have consequences /actions will bear fruit in this or another world

General benefits of a virtuous society

Connects being good with character and fulfilling the purpose ofhuman life

Dharma disciplines the pursuit of pleasure and wealth and thusprovides the balance to a good life

Pandavas had to give up their kingdom and live

a life of a recluse in the forest when they could have raised an army and

fought the (evil) Kauravas for what was rightfully theirs. When challenged

by Draupadi on this debacle and pensive choice, Yudhisthira replies in a


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typically modest way. Expressing his instinctive and intrinsic sense of

duty, he says I act because I must. He does not follow Dharma because

of any hope of reward that might come. He acts from a sense of what he

has to do. Dharma or what he has to do is a standard of conduct and a

society needs standards. He goes on to say that following dharma is its

own reward. When one acts thus, it is motives and not consequences

that are important. Krishna will elaborate this idea later of acting

without thinking of the fruits of ones action.

As we will explore further, the consequences of a morally right

action/decision are far reaching. Even if there is an immediate loss

because of a morally correct decision, the long run impact can be

dramatically positive as we avoid slipping into an abyss of immoral

actions, each slowly de-sensitizing our moral sensibilities. And the fact is

that somewhere down the line there is a negative repercussion of such

actions which wipes out all perceived gains in a painful manner.


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Mahabharata as an epic stands out in its approach of realism of

portraying no individual character as perfect at all times and exploring

each moral dilemma and its implications along with the story. We explore

some of the dilemmas that stand out in the story between their

intentions and consequences, to explore the subtlety of dharma and

ethics.

When Drona finds that Eklavya a lowly tribesperson has acquired

archery skills out of sheer dedication with just his stone image as a

teacher, he asks Eklavya for his thumb as the Gurudakshina. How

justified was this action? Why was it not protested by the princes? Or

by Eklavya himself?

We all know that Dronas demand was based on his personal desire to

keep the skill of archery with his royal wards..and his selfish and cruel

action in taking Eklavyas thumb ensures that the Eklavya is crippled

and unable to use the skill he acquired through personal dedication.


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Definitely, the princes were a party to this cruel demand as they stood

to gain their unique stature as archers undisputed. Perhaps there

could be some consideration to their age and the fact that they were

only indirectly responsible for the unfair demand. Yet, they should

have interceded on behalf of Eklavya and that could have built a

different moral foundation to the story.

Why did Eklavya not object to the cruel demand? Fact is,Drona himself

had refused to teach archery to him. He gained his skills through

sheer dedication and by learning with just a stone image of the

famous (but, obviously, selfish) Guru. Perhaps he succumbed to the

prevailing dharma. However, the fact is that he had a right to protest a

cruel act instead of being a victim of history.

When Yaksha gives Yudhisthira the right to revive any one brother, he

chose Nakula leaving the others. Why would he select the weakest


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brother, leaving Arjuna- the warrior and Bhishma the mighty? A logic

of satisfying both the mothers in a balanced choice is given in the

dilemma and a happy ending gives a part answer to the situation.

Yet . Imagine if Yudhisthira

had chosen Nakula because he was weak and would not represent a

challenge to his stature. Obviously, the reason would be wrong and

the morality of decision vitiated.

Likewise, if Yudhisthira had chosen Arjuna or Bhima for their strengths

as a warrior and for reason of managing the best out of a difficult

choice, it would be debatable to fault him on moral ground.

Mahabharata has an anecdote of Saint Kaushik, an ascetic without

much learning, who is accosted one day by a group of thieving cut-

throats who are seeking the man who had witnessed their crime.

Kaushik had seen the witness run into the forest and he knows that if


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he reveals it, he is issuing a death sentence. He must choose between

the dharma ofsatya, telling the truth, or ofahimsa, saving a life.

Faced with option of saying the truth and destroying an innocent life

and saying nothing, SaintKaushik chose to say the truth. Was he

justified? What options could he have exercised? Could he not have

remained silent instead of exposing the innocent to harm?

Perhaps the silence would have meant that he would be challenged by

the robbers chasing the innocent man, perhaps he himself would have

been victimized by the robbers. However, if Saint Kaushik believed in

protecting Dharma, he should have put himself in line of fire to save

the life. His misguided and inadequate action cost an innocent man

his life and definitely leaves us with doubts on the integrity and

morality of his action.

Once again motives are key to justifying the morality. If Saint Kaushik

remained silent or lied to save an innocent man, and under pain of

death, we do not find the action of a lie to be fundamentally wrong.


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This dilemma also brings forward the hierarchy of morality as applied

with motives to action options ranging from being silent, lying and

truth clearly being truthful here is the lowest in the hierarchy,

followed by lying to save life and being silent.

Of course, the biggest dilemma in the epic is when Arjuna hesitates to

start the war as he sees his close friends on the opposite side.

Krishna gives the Gita Updesh to explain that he is fighting for the

greater good and for the just war he must act!

Time and again during the war, Pandavas have to resort to deceit and

trickery to win. What conditions justify such acts? Why did the war in

Mahabharat happen at all? Why did the seniors like Bhishma not

intervene and arrange a peaceful settlement if for no other reason,

then to point out that the cost of a war would be much more than cost

of 5 villages for the Pandavas.


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Another key dilemma in Mahabharata unfolds as Draupadi is brought into

the court for shaming by the Kauravas. What should the seniors like

Bhishma, Dronacharya and the king Dhritrashtra do? Why were they silent

while the Kaurava Prince Dusshasana and Duryodhana were indulging in

the shameful act?

It is obvious that the seniors failed in their duty to protect Draupadi that

they lacked the moral courage to intervene and change the course of the

story. By being silent witnesses to the evil, they were as guilty of the act

as the Kaurava princes.

King Dhritrashtra emerges as a weak, immoral ruler because he does not

stop his sons from the shameful deed nor is his reversal of the results of

the game of vice at the end of the story because of any moral

considerations. He just hears the sounds of a jackal wailing and is scared

of the omen his action is thus prompted more by fear than by a sense


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of propriety. Thus, as before, motives are key to deciding the propriety of

the actions and Dhritrashtra is found wanting in his act.

A recent parallel has been in the incidence of gang-rape (& subsequent

death) of Nirbhaya in Delhi. The government arranged to airlift her to

Singapore for treatment yet the populace acknowledges that this was

prompted by populist reasons and to prevent a whip-lash of public

sentiment in Delhi. Fact is, that all the political leaders failed to respond

promptly and spontaneously to the incidence and till it was obvious that

there was a major public resentment on the inaction. Thus, because of

their immoral silence at first, corrective action in itself had little moral

substance as the motivations were felt to be weak!

An obvious learning is to have the moral courage to raise ones voice on

what is an unethical, immoral action and by opposing to cleanse the

situation.

APPLYING MAHABHARATA LESSONS TO INDIA


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Mahabharata addresses the issue of dharma in society on two planes.

Firstly, through Bhishmas message to Yudhisthira, it emphasizes the role

ofdanda, the rod of punishment, in ensuring retribution and to keep

the society aligned on the right principles. Mahabharata also talks of

proportionality of justice that the king must wield the danda justly

under the constraints of the law.

Secondly, and this is where the moral pragmatism of Mahabharata stands

out, is its message that virtuousness can be taught- a persons

character is not something one is born with, and one can be educated to

become more moral- by encouraging repeat virtuous actions.

A key message is that all matters of public policy should be publicly

debated before a decision is taken. In Draupadisquestion What is the

Dharma of the king? are the echoes of public accountability. Healthy

discussions bringing forth all perspectives can lay the foundation for a

morally correct decision simply because the basis is transparent and


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visible. Finally, the fact is that individuals are free to act as they choose

and are responsible for their decisions!

Mahabharata gives the impression that ends justify the means when

Krishna advises Arjuna to win the war through deceit and trickery. Yet, as

the story unveils, it is obvious that the victory is shallow and Krishna

himself has a surprising end as one thought shares, as a punishment

for his human mistakes.

What if the seniors in Mahabharata had curbed Duryodhanas envy? What

if the game of dice was pre-empted and Yudhisthira had not staked

others on to the game of dice? What if the seniors had saved Draupadi

from the shameful acts of Kauravas? What if they had intervened to

enable peaceful settlement of Pandavas claims?....

The answers to all these thoughts are profound. If Duryodhanas envy

had been curbed, his life-long hatred for Pandavas would have ceased

and the brothers would have lived in peace and harmony. If the game of

dice was pre-empted, if Yudhisthirahad exercised sobriety and restraint


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in his stakes the seeds of hatred that bloomed from Draupadis shame

would have not realized ground. If the seniors had brought restraint in

the extreme position of Duryodhana they would have wrought a peaceful

settlement instead of a war.

The need is for strong, ethical leadership that takes the ethically correct

decision and not a jugaad. There may be an immediate cost of such a

decision but in most cases the overall cost of a quick-fix solution is much

more and compounds with time.

Jugaad came because the moral foundations were weakened the

victory was shallow and, the fact is, led to Kalyug in Mahabharat.

When we give in to a constable asking for bribe, we are eroding both his

and our moral foundation. When he takes the bribe, it slowly becomes a

part of his system, his financial expectation. It is better to lobby and

arrange the right pay scale for him then to give him a bribe.

Suresh Rajpal, Hewlett-Packard India Ltd, was confronted with a bribe

request to resolve a long pending customs case. He refused, booking the


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loss, and in the process ending all scope of future black mailing and

unnecessary penalization.

The consequences of a morally weak decision are inevitable.each slip

takes one down an abyss, each slip desensitizes us to the ethical risks -

and it is only much later that one realizes the extent of the fall.and the

inevitable (and frequently, invisible till too-late) costs!

Applying these learnings, we shall now explore the prevalence of ethics in

Indian society and its working in Indian business.

ETHICS IN INDIAN SOCIETY

The Indian culture has been influenced by Jugaad a quick-fix solution,

that moves ahead by finding the path of least resistance. To some extent,

the Indian psyche of bowing to the administrator has also got its roots in

the 200 years of British rule.

As a result, an unusual liaison built up between the administration and

the business inspector raj built up in the country. It started with


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nazarana (token of thanks), grew to shukranama (gratitude fee)and

now it is Zabarana (Forced bribe)!

This underscores the reality of ethics. Each compromise, each slip is

steep even though it may not be obvious at that time.

The other reality is that each ethical win that we experience as

individuals, strengthens us decisively and significantly. This is the result

observed by one of the most prominent practitioners of ethics of the

recent times Mohan Das Karamchand Gandhi- in his experiments with

truth (Gandhi). The sheer process of challenging the wrong begins from

inside and once courage and patience sees a win the resulting steeling

of character is immeasurable.

Interestingly, this thought is also captured by the Mahabharata (Das, The Difficulty of

being Good, 2009) virtuousness can be trained by repeating virtuous actions.

Upto this point, we have suggested ways of improving human judgment

and improving organizations, goals that are important components of the

larger agenda of improving ethics across the society. But structural


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changes at the societal level are also needed to create a more ethical

society. Special-interest groups are often strategically exploitative and

have found ways to use our bounded ethicality against us (Tenbrunsel,

2011). Along these lines, psychologists and behavioral economists

recently have begun to develop a novel strategy for coping with the

imperfections of human judgment. Beginning with the knowledge that

people act in predictably irrational ways, these theorists structure choices

to optimally account for biased decision making. The result: better, more

ethical decisions as ingeniously designed choice environments avoid

systematic pitfalls in decision making.

Let us share a few examples to elaborate these points positively.

It is a well-documented fact that India in the mid-70s was wrought with a

corrupt bureaucracy and license raj that exploited industry and through

them the nation. Compare this with the Indian industry today a vibrant,

high-growth, high GDP emerging market that is vying for a place in the

global market. What has changed? Fundamentally, as we explore the


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history we realize that the liberalization process that started in mid 90s

changed the default options for the industry. The rule was not of getting

a license, a certificate from a government official but of self-

certification, subject to occasional audit. A simple change in the default

option eased the industrys burden and enabled it to race forward into

the 21st century.

India has traditionally been a nation where the environment sensitivity

has been low. When Ministry of Environment and Forest (MOEF) started

exploring the issue of electronics and electrical waste in India, it found

that the nation was generating over 400,000 metric tons of waste of

electronics and electrical equipment (WEEE). Moreover, WEEE laws were

non-existent (unlike mature markets) and recycling processes were very

weak in India. As a result, India faced the threat of being rendered a

dumping ground for foreign WEEE sent into India under various guises as

2nd hand reusable material or repairable material. Worse, as other peer

countries implemented their WEEE laws, India would become the dumping

ground for substandard products. Indian industry was skeptical of the


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WEEE laws and MNCs operating in India were uncomfortable with the

impending WEEE legislation that would require (like in their mature

markets) the manufacturers to own the extended producer responsibility

to minimize their WEEE (reduce, recycle, reuse). Such a law would impose

costs for reverse logistics, require a more responsible environment-

sensitive manufacturing by the producers. Today, India has enacted a

WEEE legislation after going through a public consultation over several

quarters. The law was notified in May 11 and starts a voluntary

compliance process across select product categories. This voluntary

compliance process will evolve into a mandatory compliance over 2 years

time period and would also evolve with additional product categories in a

phased manner. What has been the industry reaction? By providing for a

future lock-in and a phased introduction of the law, the MOEF has

effectively lowered resistance and enabled participation from the

industry.

In another example, there has been an increasing concern about the

energy wastage and of the extensive diesel consumption/ carbon


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emissions in India. Bureau of energy efficiency (BEE) has driven a number

of programs that are bringing energy sensitivity to the consumers and

organizations. BEEs energy star program involves the manufacturers in

labeling their products basis the energy efficiency. BEE advertises the BEE

Label and promotes consumer awareness of the subject. Result

increasingly, the market share of energy efficient devices has increased

dramatically. Separately, increasing awareness of diesel implications (as

well as a mounting fiscal deficit) has prompted the government to

partially deregulate the diesel prices from subsidies and unlike past,

this pain has been accepted by the more aware nation.

It is wrong to believe that opposite of self-less is selfish - there is a

liberal middle ground of self-interest which drives the ordinary human

beings. Rational self-interest is the correct basis on which to design

public institutions, especially when they involve large numbers of people

who do not have day-to-day contact with each other these are

institutions of democratic capitalization.


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The use of self-certification, change of default options, exposing value

trade-offs, future lock-in and phased introductions are some of the

devices that are now used as instruments of ethical change in the Indian

society.

ETHICS IN INDIAN BUSINESS

Ethical business leadership can have a profound impact on the fabric of

the nation. We have seen Tata group emerge as one of Indias leading

corporate house with a well-diversified portfolio. Tata Group has led the

Corporate Governance initiatives in India. They have also taken moral

stands and some of these have been costly. Ratan Tata, ex-Chairperson

Tata Group, has stated that there is a huge cost to being ethical but

they have borne it whenever required. In the simple decision of shifting

the Nano project from West Bengal to Gujarat, Tata Group made a

statement of its concern for its staff and its uncompromising position on

its values (TATA Nano Wikipedia page).


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Also, if HP had given a bribe to customs, all their future consignments

would have been subject to blackmail and bribe. By avoiding it the first

time, they sent a clear message and built their leadership and market

presence on a morally sound ground.

This underscores the key premise of this paper evil (the wrong, the

corrupt, the vice) has to be confronted it is only in the process of doing

so can the true strength be arrived at. Each moral victory strengthens the

individuals character each slip is so steep that the extent of fall is never

gauged at that instant!

On the other extreme, India has seen the Satyam scandal. On January 7,

2009,RamalingamRaju, the then Chairman and Managing Director of

Satyam Computers Services Ltd stunned the world by disclosing that he

had manipulated the companys financial statements for several years.

The total size of manipulation was Rs 70 billion! As an example, in the

quarter ending September 30, 2008, Satyam reported a revenue of Rs.27

billion and an operating margin of Rs.6.5 billion (24% of revenue) as


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against the actual revenue of Rs.21 billion and an operating margin of

Rs.0.61 billion (3 % of revenue). This resulted in reporting fictitious cash

of nearly Rs.6 billion in that quarter alone. Significantly, the company was

listed in the New York stock exchange (besides in India) and audited by a

member of a big 4 accounting firm and had an impressive looking

board of directors its independent directors were eminent individuals

with long experience in government (a retired cabinet secretary), industry

(the inventor of the pentium chip) and academics (a professor of

accounting at a top B school in India). Ramalingam Raju stated: It was

like riding a tiger, not knowing how to get off without being eaten. The

severity of fraud can be imagined when one realizes that the corporate

team at Satyam created cash fictitious cash by having fictitious invoices

to fictitious companies with fictitious receipts from fictitious banks! This

is the key point in any accounting fraud: it is easy to start a fraud but

impossible to exit without being caught. A fraud often unravels in the

wake of an industry downturn, a family dispute, a disgruntled employee


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blowing the whistle, or a problem with the political

establishment. (Narayanswamy, 2011, Financial Accounting - a managerial perspective)

Finally, another example is of a leading multi-national company, where

the incentives for business were linked to meeting quarterly and 6-

monthly performance guidelines. A specific business was known to have

been meeting its business targets for several periods. Then there was a

change of portfolio and a new manager was assigned this business. He

discovered that there was an unaccrued expense of $2.2 million on a

previous period revenue of $20 million. What had happened? The

previous manager met his profit quota by delaying expense accruals

quarter after quarter! Apparently, he hoped to correct it in the next

period. However, the market conditions kept a pressure on that

expectation. At the same time, a good performance prompted the

management to assign a higher targetand it created a perpetuating and

widening gap that eventually led to the debacle! The successor had to

correct the financials by recording the unaccrued expenses as per the

GAAP principles, and since the actual revenue as well as profit


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performance was wrong, the entire 3 year strategic plan for the business

had to be revised to incorporate the ground reality.

Was delaying the correction an option for this MNC? Not really! The

delayed accruals represented discounts to dealers for their sales targets.

By delaying the accruals, the business heads were also delaying payments

to the dealers hoping to pay them from the next quarters performance

and this was building an inevitable dissatisfaction in the channels. Thus,

what seemed like a simple book correction to a weak management had

severe long run implications for the company and it required the

courageous action of the succeeding manager to declare the aberration

and get it corrected at the root.

Thus, we once again see that a weakening of the ethical fibre can result

in a major fall it is only a matter of time. The seeds of the fall are sown

in that first surrender to the jugaad.

As the epic of Mahabharata shares, the principles of good leadership (in

business management), the virtues can be taught- a persons character is


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not something one is born with (Karnas anxiety, Gurucharan Das, Difficulty of being good)

and one can be educated to become more moral. To become virtuous

requires repeating virtuous action.

Strong ethical corporate governance can be transformational for an

organization. The corporate governors bring values, vision and visibility

to the organization. A clear core ideology and direction can synchronize

the entire management team and channelize their energies on the focus

areas. Values lay the moral foundation for the organization but then the

good corporate governance is also recognized by the market which

eventually gives a higher market capitalization to well governed

corporates. Visibility means transparency of actions and ensures that

organization promotes a strong culture of openness and ethical

accountability in the organization.

If B Ramalingam Raju had realized his true dharma, he would have

recognized that he should not have siphoned cash from a public limited

company to invest in his sons real estate ventures. If his senior


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managers had recognized their moral responsibilities, they would not

have participated in creating fictitious entries. If the corporate governors

would have discharged their responsibilities right, the values and

transparency would have prevented the situation. If the auditors had

performed adequate due diligence, the fraud would have been detected

long back. The values were compromised there. But then, one really

wonders how and how many of Satyams senior employees chose to sink

into the immorality of silence when the leaders were compounding one of

the biggest frauds in Indias corporate history? It was the first slip that

took everyone down the abyss

CRISIS OF ETHICS IN INDIA

Corruption is a phenomenon that is widely prevalent in the administrative

system of India and is one of the most nagging problems, impeding

growth and development. The biggest issue is institutionalized

corruption. Every aspect of the governance apparatus is marred by this

problem, with variations only in the level of corruption. It has reached


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such alarming proportions that the governance structure of India is

affected by its social, economic and political consequences, leading to

sub-optimal use of resources.

Corruption in India not only poses a significant danger to the quality of

governance; it also threatens in an accelerated manner the very

foundation of Indias democracy, rule of law and discriminates against

people it violates the principles of equality and fairness as decisions are

taken in an arbitrary manner favoring bribe-givers, as opposed to people

who are legally entitled. (Rajkumar, 2011)

The criminal system is marred by such a degree of uncertainty and

inefficiency coupled with corruption that the judicial process of

corruption cases ending in a conviction seems to be a distant dream.

Mere reform of law enforcement will be inadequate to tackle the problem

of corruption in India.

Moreover, ethics as we introduced at the start of this note is an issue

that is larger than corruption. How ethical is it for tele-marketing


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companies to invade the privacies of the individual? How can the private

data of individuals be made public by data base aggregators without their

permission? Is it ethical to promote the candidature of a relation or of a

candidate from ones caste/community vs a deserving candidate obtained

through a free and fair competition? Is our stated commitment to

affirmative action compromised in real, on-the-ground implementation?

How can we strengthen the self to declare a conflict of interest and

deliver impartiality and justice in the decision?

Let us take the case of the recent sensational news of the Augusta-

Westland helicopter deal. Fact of the case is that $35 million was

apparently provided for bribe money by the officials of the Augusta-

Westland. It is not known if that money found its way to Indias decision

makers or was retained by middlemen in the value-chain. However, only

known link is that cousins of the then Air Vice Marshal SP Tyagi were

partners in the Indian link and received a sum of approx. $150,000. The

sum, in itself a small amount, seems possibly fair and above board for

liaisoning services in India for such a deal. However, even assuming that


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there were no underhand payments, fact is that the Air Vice Marshal knew

that his cousins were representing the deal, he met the foreign

representatives and discussed the deal with them. What was the

honorable way out for the AVM? He should have declared a conflict of

interest officially and dissociated himself from the decision making

process for the deal! His failure to do so casts a shadow on an otherwise

illustrious lifetime and career.

Today, a businessman is pressurized by various environmental factors to

follow a business practice which is ethical from societys point of view,

irrespective of its impact on business profits. Such a high significance of

business ethics is attributable to the following reasons:

Todays businessman firmly believes that business ethics are in

their own self-interest. That is, if business enterprises follow

business practices, it will lead to higher profits and prosperity in

the long run. For example, if a firm maintains quality, refrains from


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hoarding of goods during scarcity, pay taxes honestly, cares for the

welfare of employees, and so on, it will find in the long run its sales

and profits have increased considerably as it earns goodwill in the

market.

Good corporate governance has an inevitable impact on the firms

valuation. In fact, having a good, responsible set of managers in

the board of directors has an immediate positive halo and reaction

in the stock market and on its market valuation.

As a part of overall economic system, a business organization is

pressurized by various environmental factors to act credibly and

behave ethically. Thus, a business enterprise may have no option

but to desist from undesirable trade practices like hoarding and

profiteering due to pressure from consumer forums. Similarly,

trade unions can put pressure on a business organization to pay

fair wages, provide for labor welfare, encourage participation, and


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so on. Besides todays businessman is aware that ethics are a part

of the social environment and their observance is beneficial to the

society.

It would not be an exaggeration to say that most business people

behave ethically because of their moral consciousness. Like any

other member of the society business people also believe that

ethical business conduct is good business as well as good

citizenship. That is the reason why most of the business people

have been avoiding unethical business practices like adulteration,

overcharging, black marketing, producing inferior quality or

spurious goods etc, irrespective of the fact whether the laws were

enacted to declare such practices as illegal or not.

In almost all spheres of business activity, laws have been enacted

which declare certain business practices to be illegal and


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prohibited. Business enterprises find it obligatory not to resort to

such business practices. In short, obedience to such laws is ethical.

Moreover, most corporates now build in checks and balance in the

corruption sensitive processes like purchase, cash payouts and

revenue management. This also promotes the build-up of

transparency and a morally correct organization.

THE WAY FORWARD

Resurgence of ethics will be the need of the 21st century India. We

examine the role of political leadership, business leadership/managers

and academic leaders in strengthening the moral backbone of India.

Ethical political leadership can have a profound impact on the fabric of

the nation. The emerging environment with an active media will foster

transparency. Increasingly, we are seeing politicians being caught off-

guard by the media and civil society activists. In sitting silently at

Rajghat, Anna Hazares simple symbolism sparked a movement that has


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catalyzed the nation. With a correction of the fundamentals at the top,

with the inception of a younger generation of educated leadership into

the governance process, we have an opportunity to build a process of

change from the top.

Professional bureaucracy supported by an enlightened political leadership

is creating an environment which is structured to more ethical decisions

by easing default options and using innovative devices that have been

covered earlier in this note.

Business leadership has to define its value system and it has to relieve

management of artificial pressures of performance. Management in turn

has to mature and resist pressures of artificial performance.

Academic leaders and teachers have a key role in building the moral

backbone of the young India. This can be done by building ethical

training as a part of the academic curriculum. Definitely, books and case-

studies help bring this fascinating subject alive. One can imagine

Gandhis dilemma before going to the judge with the truthyet, the


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subject is a practical one. It needs to be taught in the reality of life,

through real experiences. Each time a person falls and is shown the

ravine and each time the person resists temptation, the moral backbone

of the individual and the nation- is formed!

It is in the sum total of these positive experiences that the ethical moksha

will be realized. We can argue that the initial ethical base is too little, too

weak. Yet, the reality is that as we collectively build each positive

experience, we are driving the ethical momentum to a new extreme. As

we build more believers for ethics, we are driving the proposition to the

mainstream. If we take care to build enough opinion leaders, we will build

our mainstream adopters one day.

Finally, it will not be an easy journey.

The nation has to realize that it has to bear the cost of being ethical.

However, it is better to face the consequences of the truth than to face

the consequences of a lie!


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BIBLIOGRAPHY

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Airley, D. (n.d.). The Honest Truth about Dishonesty.

Das, G. (2009). The difficulty of being good. New Delhi: Penguin Books.

Ethics. (n.d.). Retrieved November 18, 2012, from Wikipedia:

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Gandhi, M. D. (n.d.). The story of my experiments with Truth. (M. Desai,

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Manuel Velasquez, C. A. (n.d.). What is ethics. Retrieved Jan 10, 2013, from

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Narayanswamy, R. (2011). Financial Accounting - a managerial perspective.

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Rajkumar, C. (2011). Corruption and Human Rights in India. New Delhi:Oxford University Press.

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