Mahanth S. Joishy, Editor-in-Chief
The Avengers are not the only action heroes around. Bill Gates, Ratan Tata, Azim Premji, and other philanthropists are participating in a top-secret conclave in Bangalore today to discuss the best ways to harness their private wealth for charitable development work. The meeting was set up at the initiative of Indian billionaire Premji for a change, marking an unmistakable shift from the way things used to be (see article attached below which I wrote in May 2011).
This organic meeting of the minds dramatically shows us how things really get done in the United States – India relationship. Government to government contacts are surely necessary, but no longer the star player in the new world of diplomacy we live in. On Hillary Clinton’s recent visit to India, little of grand consequence was really achieved when she met leading politicians such as Manmohan Singh and Mamata Banerjee. Few major issues were resolved and there was much talk of having more meetings to deal with things. That’s how government works. This month Leon Panetta will come to India and another high-level “strategic dialogue” will also take place- and while these are important, we expect limited resolutions on disagreements or progress toward tackling the major problems facing our world. There are months and years of hand-wringing to come on business visas or Iran sanctions or military purchasing.
However, when Bill Gates comes to town representing the Bill & Melinda Gates Foundation and meets his philanthropist counterparts, things get done. NGOs, individuals, businesses, academic institutions, and city, state, and federal government agencies working together will have far more impact on polio eradication, diarrhea elimination, or global warming than Washington and New Delhi bureaucrats and politicians working alone. We applaud the philanthropists and the staffs at their respective foundations for showing us how diplomacy is supposed to work in the 21st century. Godspeed.
From Foreign Policy Digest, May 2011
No event exemplifies the rise of South Asia’s richest better than the grand housewarming party hosted by Mukesh Ambani in Mumbai in late 2010. Valued at over $1 billion, his family skyscraper rises 570 feet and towers over the world’s largest slums where 9 million poorer souls live, providing the starkest contrast between rich and poor anywhere on earth. Around 80 lucky guests were reportedly wined and dined that evening in a house that requires a staff of 600 to maintain. This is fitting for the most expensive household in the world that includes a helipad, a cinema, multiple swimming pools, and six floors of parking garages.
Business tycoons such as Ambani and his wealthy brethren on the subcontinent are relatively new to the billionaire scene. But they’ve arrived in style. The number of US dollar billionaires in India has climbed dramatically over the last few years to a record 55 in 2011 according to Forbes magazine; Pakistan even fielded its first entry into the billionaires club with Mian Muhammad Mansha in 2010. This upwardly mobile trend is part of a dramatic billionaire surge throughout BRIC countries and underlines the larger issue of dramatic GDP growth and transition toward capitalism in emerging markets.
The trend also brings up several difficult questions about sub-continental society. We know the rich are getting richer in South Asia. What about the rest? Will the men and women behind these success stories choose to help spread the wealth to those less fortunate? Finally, how many of those who have achieved such vast sums of money used unethical or illegal means?
Thomas Friedman’s best-seller The World is Flat was named after a throw-away comment by Bangalore billionaire Nandan Nilekani, cofounder of Infosys. Though Friedman’s intent was to expound on how globalization had leveled the playing field in business, it could just as well apply to the possibility of getting ultra-rich. The last decade of the 20th century vaulted Indians into dollar billionaire status for the first time in modern history. As recently as the early 1990’s there were none. Liberalization of the Indian markets and the boom in IT and other industries helped companies such as Reliance, Infosys, Wipro, Tata, and others to compete successfully on the world stage. It also helped make their managers and investors incredibly rich, often after humble beginnings. India’s 55 billionaires account for over 20 percent of its GDP and a whopping 80 percent of stock market capitalization in a nation of over 1.2 billion people.
One of these billionaires, Satyam Computer Services CEO B. Ramalinga Raju lost his way with a spectacular collapse in 2009. In a scandal widely considered one of India’s largest corporate frauds in history, Raju admitted to widespread cooking of the books at Satyam worth billions, and inventing tens of thousands of employees at the firm who didn’t exist. Unflattering comparisons to both Bernie Madoff and Enron were common in Indian and international media. Raju was jailed and lost most of his ill-gotten fortune.
Raju was one of a number of India’s elite to become embroiled in corruption charges in recent times. Anil Ambani, the billionaire brother of Mukesh and the other half in India’s most infamous family feud is currently under investigation for massive graft related to a government licensing process for Reliance Telecom. This scandal and others related to the shady nexus of business tycoons and politicians even resulted in the arrest of India’s former Telecommunications Minister and implicated yet another billionaire business scion, Ratan Tata. Prime Minister Manmohan Singh’s administration and Congress party have been battered by accusations of graft and incompetence. Yet another deep stain on India’s international reputation was added when corruption pervaded the 2010 Commonwealth Games for all the world to witness- involving many of the key players in India’s elite circles. Observers believe that new scandals as yet unknown could emerge.
South Asian billionaires have popped up abroad too- and so have their troubles. In a landmark court case even by Wall Street standards, Sri Lankan born billionaire Raj Rajaratnam of the Galleon Group hedge fund operating out of New York City was convicted of repeatedly resorting to insider trading by the Manhattan District Attorney’s office. The man also reportedly had a penchant for, amongst other things, female employees in spandex, watching his staff get Tased, hot sauce, and dwarves. Rajaratnam and his parade of mostly Indian cohorts have embarrassed members of the South Asian diaspora the world over. On the other hand, by coincidence, it was an Indian-born District Attorney, Preet Bharara who led the prosecution.
Whether the fortunes are earned legitimately or not, the story of billionaires rising is incomplete on its own. Most studies indicate that common people in South Asia are not doing quite so well. Victims of relentless inflation, high unemployment, a poor educational system and consistently poor infrastructure from nation to nation, many will never enjoy the benefits of national growth or the success of leading companies. While the IT sector has remained strong in South Asia, and especially India, most will never even learn to use a computer. Even so, only a tiny fraction could be employed in the field anyway regardless of how much it grows.
Not all of the news is bad, however. Bill Gates and Warren Buffett may have grabbed the headlines for traveling to India this spring to convince Indian billionaires to give away most of their fortunes like they do, but some Indians have already been engaging in philanthropy. Azim Premji of Wipro has promised $2 billion for education and social projects, while the Tata family has been well-known for supporting charitable work for years. There is certainly a long way to go, as charitable giving rates in India lag far behind Western nations. This is at least in part due to cultural factors. There is hope that as the group of India’s billionaires grows and matures into more responsible members of society, they will engage in increased charitable work.
They can help in other ways, too. For example Nandan Nilekani is now using his formidable IT management skills toward helping the public sector. He leads an ambitious and pioneering government project to create a national ID card system for all Indians.
South Asia’s billionaires are undoubtedly a source of pride for their countries, especially because they give citizens from all backgrounds a sense of possibility and aspiration in an area of the world that has long felt downtrodden and disrespected by foreigners. Every South Asian country is still poor overall. Billionaires have also helped announce homegrown business ingenuity on the world stage.
Domestically and internationally, there is increasing interest in whether South Asian businessmen can compete and make money legitimately. The rash of scandals in government and business throughout the sub-continent, many involving familiar billionaire names, has not inspired confidence. It will be up to the elites in society, most of whom have dealings with each other, to help the government police their activity while engaging in self-regulation measures as well. In the long run this will pay dividends for themselves as well as for larger swaths of the population. It is likely that most Indian billionaires earned their keep legitimately, but the onus is on them to prove it through transparency and vigilance. It is time for them to give back by taking a larger interest in their nation’s affairs and even global issues, as has been more common in the West.
We are witnessing the beginnings of a potentially powerful force for development funding in South Asia. As billionaires and even millionaires realize that their fortune can only buy so much happiness in the form of spectacular houses, cars, jets, and other trappings for themselves, it is likely that the philanthropy movement will gain steam. The money of Indian billionaires will go further in their own homelands, due to the value of the rupee, as well as their unique ability to tap local connections and manage oversight. Consumers and the media should not only observe, but demand this type of involvement of their wealthy.