Thoughts on Ethics in India and the way forward for building India‟s ethical foundation
India faces a crisis in ethics at all levels of the society. Building the moral discipline will require more than classroom training, legal

Ethics in India – an overview

reforms or media/civil actions.

Amrita Aggarwal



Ethics in India – an overview

Table of Contents
EXECUTIVE SUMMARY ................................................................................. 3 ETHICS IN INDIAN CULTURE ........................................................................ 7 THE LEARNING OF ETHICS FROM THE EPICS ............................................... 10 APPLYING MAHABHARATA LESSONS TO INDIA ................................................................................... 13 ETHICS IN INDIAN SOCIETY ....................................................................... 23 “Ethics is to know the ETHICS IN INDIAN BUSINESS ...................................................................... 29 difference between what you

can do and what is right”… CRISIS OF ETHICS IN INDIA ........................................................................ 35
THE WAY FORWARD .................................................................................. 41

Potter Stewart BIBLIOGRAPHY .......................................................................................... 28

Ethics as a subject has crept into the Indian culture and philosophy through generations.”…they vanished. Even as we grappled with potential answers. Too Page 3 . there is also a realistic representation of dilemmas.Ethics in India – an overview Page 3 EXECUTIVE SUMMARY “Why did the Greek and Roman civilizations vanish?” Asked my Professor at Lady Shri Ram College. because their values vanished from them…”. While basic values are beautifully captured in the Indian epics. she gave the enlightening answer.

However. discussions and case-studies will make a good start for the next generation. To address the issue of corruption.Ethics in India – an overview many times. the dilemmas end up with a „jugaad‟ solution – something that finds a path of least resistance to a quick fix solution. 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. The very process of discussion about the moral propositions can actually start a process of self-awareness that distinguishes between right and Page 4 . While traditional perusal of the scriptures built the initial value foundation of the Indian society. it will need to go far beyond academic training – ethics will have to be learnt in the school of real life. in real life. Ethics training is fundamental to the process. the current generation of Indians faces challenges of a different level. we need to build a moral foundation for India.

However. ethics – by definition – is a far larger subject than an isolated fraud or corrupt act. of course. however. Most religions. But ethics applies as much to the behavior of the atheist as to that of the devout religious person. then ethics would apply only to religious people. (Airley) Corruption is an extreme outcome of capitulating to the temptation. Being ethical is also not the same as following the law. However. Ethics. Yet if ethics were confined to religion. But one should not identify ethics with religion. Religion can set high ethical standards and can provide intense motivations for ethical behavior. Many people tend to equate ethics with religion.Ethics in India – an overview wrong. cannot be confined to religion nor is it the same as religion (Manuel Velasquez). The law often incorporates ethical standards to which most citizens subscribe. advocate high ethical standards. we can tend to distort the interpretation to suit our convenience. limited perhaps by limits of our own conviction of an action. But laws Page 5 .

such as the right to life. the right to Page 6 . assault. refers to those standards that impose the reasonable obligations to refrain from rape. compassion. Nazi Germany is a good example of a morally corrupt society.Ethics in India – an overview can deviate from what is ethical. First. Ethical standards also include those that enjoin virtues of honesty. Finally. or specific virtues. What. Ethics. then." In any society. But standards of behavior in society can deviate from what is ethical. and loyalty. ethical. And. fairness. benefits to society. 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. is ethics? Ethics is two things. ethical standards include standards relating to rights. in fact. and fraud. stealing. obligations. usually in terms of rights. murder. for example. slander. being ethical is not necessarily the same as doing "whatever society accepts. most people accept standards that are. An entire society can become ethically corrupt. ethics refers to wellfounded standards of right and wrong that prescribe what humans ought to do.

then. live up to standards that are reasonable and solidly-based. As mentioned above. Ethics also means. laws and social norms can deviate from what is ethical. ethics refers to the study and development of one's ethical standards (Manuel Velasquez). Secondly. and striving to ensure that we.Ethics in India – an overview freedom from injury. and the right to privacy. 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 Page 7 . and the institutions we help to shape. So it is necessary to constantly examine one's standards to ensure that they are reasonable and well-founded. In the following pages. Such standards are adequate standards of ethics because they are supported by consistent and well-founded reasons. the continuous effort of studying our own moral beliefs and our moral conduct.

contained in the Vedas are the „Rita‟. The Ramayana projects the ideal man.(Sivaramakrishnan) The Bhagwad Gita details the moral principles and Krishna expounds them as the supreme Lord. Indian literary history fully embraces the concept of noble ends justifying dubious means. The Mahabharata is a veritable treasurable of moral maxims which characters like Bhishma. Yet. The two great concepts that have a bearing on ethics.. the ideal brother and the ideal servant. right and wrong in it‟s epics. (Business vs ethics: The Indian trade-off. Yudhisthira and Vidura expound on occasions. the truth. and Rama himself is held up as the very image of Dharma.distinguishing between the virtues and vices. or the eternal law –„Satya‟.Ethics in India – an overview India‟s rich cultural heritage has captured the debate of good and bad. 2012) Three texts intrinsic to Indian culture and philosophy help to explain the current business landscape: the epics Ramayana and Mahabarata and the Page 8 . the ideal wife. the law of God. the Ramayana and the Mahabharata.

In addition. Written to advise a king on statecraft.going so far as to encourage the protagonist. whose Page 9 . even gods resort to deceit and trickery to accomplish their ends. “In both the Ramayana and the Mahabharata. all part of an episode in a compendium spanning several lifetimes of different characters. the Arthshastra is often cited publicly by prominent politicians and businessmen as the foundation of their strategic thought. Arjuna. Lord Krishna repeatedly devises "underhanded" methods to defeat the opposing army -. economic policy and military strategy. In the latter.Ethics in India – an overview economic treatise Arthshastra. to attack and kill an unarmed adversary. developing the dilemmas through short stories or allegories. The epics explore both sides of the ethical coin. the work advocates the use of deception and sometimes brutal measures for the common good. Max Weber described Machiavelli's draconian Prince as harmless when compared to Arthshastra.

Why be good? Page 10 . perceived right and wrong! Fact is.Ethics in India – an overview topics range from "when a nation should violate a treaty and invade" to "when killing domestic opponents is wise. 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 existence of two different perspectives in these scriptures builds the conflict between the right. there are three threads that evolve in the analysis. Specifically. 2009) delivers an interesting compendium of ethics in the epics. THE LEARNING OF ETHICS FROM THE EPICS Gurucharan Das‟s exploration of Mahabharata (Das.

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 of human life  Dharma disciplines the pursuit of pleasure and wealth – and thus provides the balance to a good life It is not easy being good.Ethics in India – an overview Mahabharata explores this role of dharma throughYudhisthira. When challenged by Draupadi on this debacle and pensive choice. 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 . 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. Yudhisthira replies in a Page 11 .

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. As we will explore further. Expressing his instinctive and intrinsic sense of duty. it is motives and not consequences that are important. The dilemmas of life – what is good? Page 12 .Ethics in India – an overview typically modest way. Krishna will elaborate this idea later – of acting without thinking of the „fruits‟ of one‟s action. 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. When one acts thus. the consequences of a morally right action/decision are far reaching. Dharma or „what he has to do‟ is a standard of conduct and a society needs standards. He acts from a sense of what he has to do. he says “I act because I must”. each slowly de-sensitizing our moral sensibilities. He does not follow Dharma because of any hope of reward that might come. He goes on to say that „following dharma is its own reward‟.

Ethics in India – an overview 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..  Drona‟s dilemma on Eklavya When Drona finds that Eklavya – a lowly tribesperson has acquired archery skills out of sheer dedication with just his stone image as a teacher. We explore some of the dilemmas that stand out in the story – between their intentions and consequences. Page 13 . to explore the subtlety of dharma and ethics. 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 Drona‟s 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 Eklavya‟s thumb ensures that the Eklavya is crippled and unable to use the skill he acquired through personal dedication.

Perhaps he succumbed to the prevailing dharma. He gained his skills through sheer dedication and by learning with just a stone image of the famous (but. Perhaps there could be some consideration to their age and the fact that they were only indirectly responsible for the unfair demand. he chose Nakula – leaving the others.  Yudhishthira‟s dilemma with the Yaksha When Yaksha gives Yudhisthira the right to revive any one brother.Drona himself had refused to teach archery to him. selfish) Guru. obviously. Why did Eklavya not object to the cruel demand? Fact is. the fact is that he had a right to protest a cruel act instead of being a victim of history.Ethics in India – an overview Definitely. Yet. However. they should have interceded on behalf of Eklavya and that could have built a different moral foundation to the story. the princes‟ were a party to this cruel demand as they stood to gain their unique stature as archers undisputed. Why would he select the weakest Page 14 .

who is accosted one day by a group of thieving cutthroats who are seeking the man who had witnessed their crime. Imagine if Yudhisthira had chosen Nakula because he was weak and would not represent a challenge to his stature. it would be debatable to fault him on moral ground. an ascetic without much learning. Obviously. the motives are the key to the right choice. Likewise. Kaushik had seen the witness run into the forest and he knows that if Page 15 .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. the reason would be wrong and the morality of decision vitiated.Ethics in India – an overview brother.  Saint Kaushik‟s dilemma of truth Mahabharata has an anecdote of Saint Kaushik. 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. leaving Arjuna. Yet.

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. If Saint Kaushik remained silent or lied to save an innocent man.Ethics in India – an overview he reveals it. if Saint Kaushik believed in protecting Dharma. Once again motives are key to justifying the morality. 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. we do not find the action of a lie to be fundamentally wrong. saving a life. However. he is issuing a death sentence. SaintKaushik chose to say the truth. or of ahimsa. Faced with option of saying the truth and destroying an innocent life and saying nothing. He must choose between the dharma of satya. and under pain of death. telling the truth. Page 16 . perhaps he himself would have been victimized by the robbers. he should have put himself in line of fire to save the life.

Page 17 . followed by lying to save life and being silent. 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. lying and truth – clearly being truthful here is the lowest in the hierarchy.Ethics in India – an overview This dilemma also brings forward the hierarchy of morality as applied with motives to action options ranging from being silent. the biggest dilemma in the epic is when Arjuna hesitates to start the war as he sees his close friends on the opposite side. 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.  Arjun‟s dilemma at the startand during the Mahabharata War Of course. then to point out that the cost of a war would be much more than cost of 5 villages for the Pandavas.

they were as guilty of the act as the Kaurava princes. By being silent witnesses to the evil. 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. 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. 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 Page 18 . King Dhritrashtra emerges as a weak.Ethics in India – an overview The Immorality of Silence Another key dilemma in Mahabharata unfolds as Draupadi is brought into the court for shaming by the Kauravas.

motives are key to deciding the propriety of the actions and Dhritrashtra is found wanting in his act. Fact is. A recent parallel has been in the incidence of gang-rape (& subsequent death) of Nirbhaya in Delhi. immoral action and by opposing to cleanse the situation. as before. APPLYING MAHABHARATA LESSONS TO INDIA Page 19 . 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 one‟s voice on what is an unethical. 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. Thus. 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.Ethics in India – an overview of propriety.

the rod of punishment. Healthy discussions bringing forth all perspectives can lay the foundation for a morally correct decision – simply because the basis is transparent and Page 20 . In Draupadi‟s question “What is the Dharma of the king?” are the echoes of public accountability. Firstly. is it‟s message that virtuousness can be taught.Ethics in India – an overview Mahabharata addresses the issue of dharma in society on two encouraging repeat virtuous actions. through Bhishma‟s message to Yudhisthira. Mahabharata also talks of proportionality of justice – that the king must wield the „danda‟ justly under the constraints of the law. Secondly. and one can be educated to become more moral. it emphasizes the role of „danda‟.a person‟s character is not something one is born with. A key message is that all matters of public policy should be publicly debated before a decision is taken. and this is where the moral pragmatism of Mahabharata stands out. in ensuring retribution and to keep the society aligned on the right principles.

Finally... as a punishment for his human mistakes. The answers to all these thoughts are profound. as the story unveils. Yet. his life-long hatred for Pandava‟s would have ceased and the brothers would have lived in peace and harmony. What if the seniors in Mahabharata had curbed Duryodhana‟s 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 Pandava‟s claims?.. If the game of dice was pre-empted.Ethics in India – an overview visible. 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. if Yudhisthirahad exercised sobriety and restraint Page 21 . it is obvious that the victory is shallow and Krishna himself has a surprising end – as one thought shares. If Duryodhana‟s envy had been curbed.

It is better to lobby and arrange the right pay scale for him then to give him a bribe. The need is for strong. If the seniors had brought restraint in the extreme position of Duryodhana they would have wrought a peaceful settlement instead of a war…. ethical leadership that takes the ethically correct decision and not a „jugaad‟. When he takes the bribe. When we give in to a constable asking for bribe. Suresh Rajpal.Ethics in India – an overview in his stakes – the seeds of hatred that bloomed from Draupadi‟s shame would have not realized ground. led to Kalyug in Mahabharat. „Jugaad‟ came because the moral foundations were weakened – the victory was shallow and. Hewlett-Packard India Ltd. booking the Page 22 . we are eroding both his and our moral foundation. the fact is. was confronted with a bribe request to resolve a long pending customs case. 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. his financial expectation. He refused. it slowly becomes a part of his system.

and the inevitable (and frequently. It started with Page 23 . that moves ahead by finding the path of least resistance. we shall now explore the prevalence of ethics in Indian society and its working in Indian business. As a result. and – in the process – ending all scope of future black mailing and unnecessary penalization.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…. The consequences of a morally weak decision are inevitable…. ETHICS IN INDIAN SOCIETY The Indian culture has been influenced by „Jugaad‟ – a quick-fix solution.Ethics in India – an overview loss. the Indian psyche of bowing to the administrator has also got it‟s roots in the 200 years of British rule. invisible till too-late) costs! Applying these learnings. To some extent. an unusual liaison built up between the administration and the business – inspector raj built up in the country.

This is the result observed by one of the most prominent practitioners of ethics of the recent times – Mohan Das Karamchand Gandhi. Upto this point. we have suggested ways of improving human judgment and improving organizations. 2009) Mahabharata (Das. grew to “shukranama” (gratitude fee)…and now it is “Zabarana” (Forced bribe)! This underscores the reality of ethics. But structural Page 24 . strengthens us decisively and significantly. The other reality is that each ethical win that we experience as individuals. 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.Ethics in India – an overview “nazarana” (token of thanks). each slip is steep – even though it may not be obvious at that time. this thought is also captured by the being Good. goals that are important components of the larger agenda of improving ethics across the society. The Difficulty of – virtuousness can be trained by repeating virtuous actions. Interestingly. Each his experiments with truth (Gandhi).

Special-interest groups are often strategically exploitative and have found ways to use our bounded ethicality against us (Tenbrunsel. Compare this with the Indian industry today – a vibrant. more ethical decisions as ingeniously designed choice environments avoid systematic pitfalls in decision making. high-growth.Ethics in India – an overview changes at the societal level are also needed to create a more ethical society. 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. What has changed? Fundamentally. Let us share a few examples to elaborate these points positively. as we explore the Page 25 . psychologists and behavioral economists recently have begun to develop a novel strategy for coping with the imperfections of human judgment. 2011). The result: better. Beginning with the knowledge that people act in predictably irrational ways. Along these lines. these theorists structure choices to optimally account for biased decision making. high GDP emerging market that is vying for a place in the global market.

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. As a result. Moreover. A simple change in the default option eased the industry‟s burden and enabled it to race forward into the 21st century. as other peer countries implemented their WEEE laws. subject to occasional audit. When Ministry of Environment and Forest (MOEF) started exploring the issue of electronics and electrical waste in India. Indian industry was skeptical of the Page 26 . a certificate from a government official – but of selfcertification. Worse. The rule was not of getting a license. WEEE laws were non-existent (unlike mature markets) and recycling processes were very weak in India. it found that the nation was generating over 400. India would become the dumping ground for substandard products.Ethics in India – an overview history we realize that the liberalization process that started in mid 90‟s changed the default options for the industry.000 metric tons of waste of electronics and electrical equipment (WEEE). India has traditionally been a nation where the environment sensitivity has been low.

The law was notified in May ‟11 and starts a voluntary compliance process across select product categories. recycle. Today.Ethics in India – an overview 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. What has been the industry reaction? By providing for a future lock-in and a phased introduction of the law. In another example. reuse). require a more responsible environmentsensitive manufacturing by the producers. there has been an increasing concern about the energy wastage and of the extensive diesel consumption/ carbon Page 27 . India has enacted a WEEE legislation after going through a public consultation over several quarters. 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. Such a law would impose costs for reverse logistics. the MOEF has effectively lowered resistance and enabled participation from the industry.

BEE‟s energy star program involves the manufacturers in labeling their products basis the energy efficiency.there is a liberal middle ground of self-interest which drives the ordinary human beings. 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. Page 28 .Ethics in India – an overview emissions in India. the market share of energy efficient devices has increased dramatically. Separately. BEE advertises the BEE Label and promotes consumer awareness of the subject. It is wrong to believe that opposite of „self-less‟ is „selfish‟ . Bureau of energy efficiency (BEE) has driven a number of programs that are bringing energy sensitivity to the consumers and organizations. this pain has been accepted by the more aware nation. „Rational self-interest‟ is the correct basis on which to design public institutions. Result – increasingly. 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.

exposing value trade-offs. In the simple decision of shifting the Nano project from West Bengal to Gujarat. Page 29 . Tata Group has led the Corporate Governance initiatives in India. future lock-in and phased introductions are some of the devices that are now used as instruments of ethical change in the Indian society. change of default options. They have also taken moral stands and some of these have been costly.Ethics in India – an overview The use of self-certification. has stated that there is a huge cost to being ethical – but they have borne it whenever required. We have seen Tata group emerge as one of India‟s leading corporate house with a well-diversified portfolio. Ratan Tata. Tata Group made a statement of its concern for its staff and its uncompromising position on its values (TATA Nano Wikipedia page). ETHICS IN INDIAN BUSINESS Ethical business leadership can have a profound impact on the fabric of the nation. ex-Chairperson Tata Group.

if HP had given a bribe to customs. the vice) has to be confronted – it is only in the process of doing so can the true strength be arrived at. all their future consignments would have been subject to blackmail and bribe. 2008. Each moral victory strengthens the individual‟s character – each slip is so steep that the extent of fall is never gauged at that instant! On the other extreme. The total size of manipulation was Rs 70 billion! As an example. India has seen the Satyam scandal.Ethics in India – an overview Also.RamalingamRaju. 2009. This underscores the key premise of this paper – evil (the wrong. Satyam reported a revenue of Rs.27 billion and an operating margin of Rs. “On January 7. the corrupt.6. they sent a clear message and built their leadership and market presence on a morally sound ground.5 billion (24% of revenue) as Page 30 . in the quarter ending September 30. By avoiding it the first time. the then Chairman and Managing Director of Satyam Computers Services Ltd stunned the world by disclosing that he had manipulated the company‟s financial statements for several years.

Ramalingam Raju stated: “It was like riding a tiger. Significantly.” 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.21 billion and an operating margin of Rs.Ethics in India – an overview against the actual revenue of Rs. This resulted in reporting fictitious cash of nearly Rs. 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).0. A fraud often unravels in the wake of an industry downturn. industry (the inventor of the pentium chip) and academics (a professor of accounting at a top B school in India). a disgruntled employee Page 31 . a family dispute.61 billion (3 % of revenue). not knowing how to get off without being eaten.6 billion in that quarter alone.

What had happened? The previous manager met his profit quota by delaying expense accruals quarter after quarter! Apparently.Ethics in India – an overview blowing the whistle. or a problem with the political establishment. and since the actual revenue as well as profit Page 32 . Then there was a change of portfolio – and a new manager was assigned this business.“ (Narayanswamy. a good performance prompted the management to assign a higher target…and 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. He discovered that there was an unaccrued expense of $2. At the same time. another example is of a leading multi-national company.2 million on a previous period revenue of $20 million. he hoped to correct it in the next period. where the incentives for business were linked to meeting quarterly and 6monthly performance guidelines.a managerial perspective) Finally. the market conditions kept a pressure on that expectation. A specific business was known to have been meeting it‟s business targets for several periods. Financial Accounting . However. 2011.

the entire 3 year strategic plan for the business had to be revised to incorporate the ground reality. Thus. Was delaying the correction an option for this MNC? Not really! The delayed accruals represented discounts to dealers for their sales targets. As the epic of Mahabharata shares. 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. The seeds of the fall are sown in that first surrender to the „jugaad‟. 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 principles of good leadership (in business management).a person‟s character is Page 33 . By delaying the accruals.Ethics in India – an overview performance was wrong. 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. the virtues can be taught.

A clear core ideology and direction can synchronize the entire management team and channelize their energies on the focus areas. If B Ramalingam Raju had realized his true dharma. Strong ethical corporate governance can be transformational for an organization. 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. vision and visibility to the organization. Gurucharan Das.Ethics in India – an overview not something one is born with (Karna‟s anxiety. To become virtuous requires repeating virtuous action. The corporate governors bring values. Visibility means transparency of actions and ensures that organization promotes a strong culture of openness and ethical accountability in the organization. he would have recognized that he should not have siphoned cash from a public limited company to invest in his sons‟ real estate ventures. Difficulty of being good) – and one can be educated to become more moral. If his senior Page 34 .

But then. impeding growth and development. If the corporate governors would have discharged their responsibilities right. The biggest issue is institutionalized corruption. the fraud would have been detected long back. the values and transparency would have prevented the situation.Ethics in India – an overview managers had recognized their moral responsibilities. Every aspect of the governance apparatus is marred by this problem. The values were compromised there. with variations only in the level of corruption. It has reached Page 35 . they would not have participated in creating fictitious entries. If the auditors had performed adequate due diligence. one really wonders how and how many of Satyam‟s senior employees chose to sink into the immorality of silence when the leaders were compounding one of the biggest frauds in India‟s 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.

ethics – as we introduced at the start of this note – is an issue that is larger than corruption.” (Rajkumar. “Corruption in India not only poses a significant danger to the quality of governance. How ethical is it for tele-marketing Page 36 . 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. leading to sub-optimal use of resources. 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. it also threatens in an accelerated manner the very foundation of India‟s democracy.Ethics in India – an overview such alarming proportions that the governance structure of India is affected by it‟s social. as opposed to people who are legally entitled. Moreover. Mere reform of law enforcement will be inadequate to tackle the problem of corruption in India. economic and political consequences.

However. However. It is not known if that money found its way to India‟s decision makers or was retained by middlemen in the value-chain.Ethics in India – an overview 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 one‟s caste/community vs a deserving candidate obtained through a free and fair competition? Is our stated commitment to affirmative action compromised in real. even assuming that Page 37 . 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 AugustaWestland helicopter deal. Fact of the case is that $35 million was apparently provided for bribe money by the officials of the AugustaWestland. The sum. 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. seems possibly fair and above board for liaisoning services in India for such a deal. in itself a small amount.

Such a high significance of business ethics is attributable to the following reasons: 1. For example. Today. irrespective of its impact on business profits. fact is that the Air Vice Marshal knew that his cousins were representing the deal. if business enterprises follow business practices. That is.Ethics in India – an overview there were no underhand payments. if a firm maintains quality. it will lead to higher profits and prosperity in the long run. Enlightened Self Interest Today‟s businessman firmly believes that business ethics are in their own self-interest. 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. refrains from Page 38 . he met the foreign representatives and discussed the deal with them. a businessman is pressurized by various environmental factors to follow a business practice which is ethical from society‟s point of view.

2. and Page 39 . it will find in the long run its sales and profits have increased considerably as it earns goodwill in the market. encourage participation. and so on. trade unions can put pressure on a business organization to pay fair wages. Environmental Pressures As a part of overall economic system. provide for labor welfare. Thus. a business organization is pressurized by various environmental factors to act credibly and behave ethically. 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.Ethics in India – an overview hoarding of goods during scarcity. pay taxes honestly. 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. In fact. Good corporate governance has an inevitable impact on the firm‟s valuation. cares for the welfare of employees. having a good.

Moral Consciousness It would not be an exaggeration to say that most business people behave ethically because of their moral consciousness.Ethics in India – an overview so on. black marketing. overcharging. 3. 4. Legal Requirements In almost all spheres of business activity. laws have been enacted which declare certain business practices to be illegal and Page 40 . Besides today‟s businessman is aware that ethics are a part of the social environment and their observance is beneficial to the society. 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. producing inferior quality or spurious goods etc. irrespective of the fact whether the laws were enacted to declare such practices as illegal or not.

most corporates now build in checks and balance in the corruption sensitive processes like purchase. business leadership/managers and academic leaders in strengthening the moral backbone of India. Business enterprises find it obligatory not to resort to such business practices. 5. Increasingly. we are seeing politicians being caught offguard by the media and civil society activists. We examine the role of political leadership. THE WAY FORWARD Resurgence of ethics will be the need of the 21st century India. obedience to such laws is ethical.Ethics in India – an overview prohibited. In short. In sitting silently at Rajghat. Check and balances Moreover. Ethical political leadership can have a profound impact on the fabric of the nation. The emerging environment with an active media will foster transparency. Anna Hazare‟s simple symbolism sparked a movement that has Page 41 . cash payouts and revenue management. This also promotes the build-up of transparency and a morally correct organization.

Business leadership has to define its value system – and it has to relieve management of artificial pressures of performance. we have an opportunity to build a process of change from the top. With a correction of the fundamentals at the top. the Page 42 .Ethics in India – an overview catalyzed the nation. books and casestudies help bring this fascinating subject alive. Definitely. with the inception of a younger generation of educated leadership into the governance process. 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. One can imagine Gandhi‟s dilemma before going to the judge with the truth…yet. 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. This can be done by building ethical training as a part of the academic curriculum.

It needs to be taught in the reality of life. it is better to face the consequences of the truth than to face the consequences of a lie! Page 43 . the moral backbone of the individual – and the nation. through real formed! It is in the sum total of these positive experiences that the ethical moksha will be realized. If we take care to build enough opinion leaders. The nation has to realize that it has to bear the cost of being ethical. too weak. we are driving the proposition to the mainstream. Finally. the reality is that as we collectively build each positive experience.Ethics in India – an overview subject is a practical one. we will build our mainstream adopters one day. As we build more believers for ethics. Yet. it will not be an easy journey. We can argue that the initial ethical base is too little. we are driving the ethical momentum to a new extreme. However. Each time a person falls and is shown the ravine – and each time the person resists temptation.

Ethics in India – an overview Page 44 .

A. Blind Spots. Tenbrunsel. The difficulty of being good. from http://www. Sivaramakrishnan. R. Retrieved November 18. (n. D. from http://knowledge. Financial Accounting .).wikipedia. (n.a managerial perspective. 2013.).wharton. Rajkumar. (n. (n.d. Ethics. New Jersey: Princeton University Press. Page 45 . (2009). from http://ybaluri.).). (n. V.d. C. Corruption and Human Rights in India.d. (2011). M.). Retrieved from http://en. C. (2012. Desai. Retrieved Jan 10.) Bombay: Navajivan Publishing House.html Narayanswamy. Manuel Velasquez. (M. Retrieved November 18. (Knowledge@Wharton) Retrieved November Gandhi. M. Indian Culture: The Ethical Dimension. January 3).Ethics in India – an overview BIBLIOGRAPHY Business vs ethics: The Indian trade-off. (2011). New Delhi: Oxford University . B. (2011).edu/ethics/practicing/decision/whatisethics. (n.scu.d. What is ethics. New Delhi: PHI Learning Pvt G. The Honest Truth about Dishonesty. 2012.upenn. The story of my experiments with Truth.). from Wikipedia: http://en. Das.cfm?articleid=2897 Airley.htm TATA Nano Wikipedia page. New Delhi: Penguin Books. 2012.d. D. 2012.wikipedia.d.

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