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The Indian IT industry has changed the global image of India for good with
companies like TCS, Wipro and Infosys among others having transformed into
multi-billion dollar corporations. But what is generally not acknowledged is the
contribution of tax payers and tax exemptions given to these companies which has
played quite a significant role in their success.
It is no secret that business enterprises in particular do indulge in ethical
positioning of their brands through their corporate social responsibility (CSR)
initiatives. NGOization of such efforts by companies and even by the state has
been underway for quite some time. CSR is generally used to promote voluntary
corporate initiatives as an alternative to mandatory regulations. It enables
companies to proclaim their responsibility without necessitating need for
companies to meet certain minimum standards. CSR efforts are primarily aimed at
escaping possible regulation. Besides, there is a lurking fear as well that
inspires them to undertake social work of some sort. This fear has been aptly
articulated by NR Narayana Murthy, chief mentor, Infosys Technologies. In an
interview to CNBC he said, Unless companies give back to society some of what
they are getting out of it, a very violent future may be in store for the
country.
World Business Council for Sustainable Development has defined CSR as the
ethical behavior of a company towards society. Undertaking CSR efforts coupled
with signing the UN Global Compact, a global CSR initiative offers good public
relations exercise for these companies. Among the Indian IT companies, companies
like Infosys Technologies (joined in 2001) and Wipro Technologies (joined in
2008) and TCS (joined in 2006) are members of UN Global Compact.
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It is noteworthy that IT companies like Infosys and Wipro, which are members
of UN Global Compact were allowed a ten-year exemption from Corporate Income
Tax, Sales Tax, Customs Duty, Excise Duty since they could not deal with the
astronomical cost of telecommunications, customs duty rules and high rates of
taxation. Now although IT companies have matured, they are still availing the
ten-year tax holiday by setting up new units with fresh ten-year extensions
given by the government. If all IT companies come out of the scheme, the
government will gain huge amount of money coming through direct taxes alone,
which can be allocated for urgently needed social sector development. Instead of
letting the government do that Infosys, Wipro, Satyam, TCS and others are each
setting up Special Economic Zones (SEZ) to enjoy tax benefits! Infosys, Wipro,
Satyam, Tata Consultancy Services and most other IT companies are promoters and
beneficiaries of SEZ. The SEZs provide a fifteen-year tax holiday to the IT
companies after 2009 and in this manner the IT companies have found a way out of
paying full taxes until the year 2024.
Take the case of Azim Premji Foundation that is working on the
universalization of elementary education. The foundations website says: The
Foundation believes that the only way to sustain it is by improving the quality
of learning in schools. All efforts will therefore be directed at interventions,
partnerships and communications towards guaranteeing learning in the school.
It appears to feign ignorance of the recommendations by the Government of
Indias reports on education advocating a common school system.
The National Education Policy has endorsed the recommendation of setting up a
common school system across the country. However, the recommendation could never
be translated into action because of privately managed English medium schools.
Without advocating common school system, it is insincere to advocate
universalization of elementary education because no developed or developing
country has ever achieved universal elementary education or, for that matter,
universal secondary education, without a strong state-funded and state-regulated
common school system. It is indeed an irony that such an equitable common school
system has been prevalent in some form or the other in several European
countries, the US and Canada but not in India, where it is needed the most.
There is an urgent need for a legislation underpinning the common school system,
but this does not seem to figure in the CSR efforts of Azim Premji Foundation.
The case of CSR efforts by Infosys Foundation is no different. While public
health institutions in India are decayingowing to low spending by government on
public health with around 80% of Indias healthcare spending going towards
private medical care. But instead of promoting people centric health systems,
the Foundation is quite technocentric, although it says its attempting to meet
the challenge of high-quality healthcare for the benefit of the rural and urban
poor.
Apart from constructing hospital wards, donating hi-tech equipment and
organizing health camps, the Foundation also distributes medicines to
economically weaker sections in remote areas. It does not even realize that the
focus must be on comprehensive universal healthcare system instead of a
selective and targeted program. Currently, it is being confined to family
planning, immunization, selected disease surveillance and medical education and
research. The time has come to reclaim public health and make a paradigm shift
from a policy based entitlement for healthcare to a rights based entitlement.
But corporate Foundations are simply interested in the ethical positioning of
their brands and perhaps to assuage the latent anger of the poor against the
affluence of the corporations through their CSR activities. This is the status
of IT companies that are signatories of Global Compact.
Gopal Krishna
The author is heading an NGO called Toxic Watch (The opinions expressed here
are those of the author and do not necessarily reflect the view of Dataquest)
maildqindia@cybermedia.co.in
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