The Hindu Business Line : 'India Inc should take up social responsibility role'

Corporate governance norms must be flexible enough to encourage voluntary compliance without imposing a heavy cost burden on such companies, the Minister said.

Mr Prem Chand Gupta

New Delhi , Feb. 16

THE UNION Minister for Company Affairs, Mr Prem Chand Gupta, on Thursday said that the corporate sector would have to adopt social responsibility and sound corporate governance practices as an integral part of their business strategy.

Speaking at the inaugural session of the two-day conference on `2006 policy dialogue on corporate governance in India', he stressed that the responsibility of India Inc was increasing as the Government was withdrawing itself from the economic activities.

In his address at the conference, organised by the Ministry through the National Foundation of Corporate Governance in cooperation with OECD and supported by the CII, Institute of Company Secretaries of India, and Institute of Chartered Accountants of India, the Minister said, "As it was becoming increasingly difficult for the Government to provide jobs to all, now it was the turn of the private sector to shoulder the responsibility so that the problem of unemployment can be tackled effectively."

While emphasising on the importance of sound corporate governance practices, he also sought a debate on the compliance norms for small and medium enterprises and family-owned businesses.

"The vast majority of companies that make up the Indian corporate sector comprises small and family-owned businesses. Therefore, I feel it is necessary to debate what should be the compliance norms for small and medium enterprises," he said, adding that "we do not believe that corporate governance norms should be followed simply because the law says so. This will not serve the desired purpose."

Corporate governance norms must be flexible enough to encourage voluntary compliance without imposing a heavy cost burden on such companies, he said.

Talking about new initiatives taken by his Ministry, Mr Gupta said that the Government was in the final stages of introducing a comprehensive new Companies Bill in Parliament during the ongoing Budget session, which would strengthen the corporate governance and investor protection measures.