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Gender Equality, Inclusivity and Corporate Governance in India

Article  in  Journal of Human Values · April 2013

DOI: 10.1177/0971685812470327

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Bala N. Balasubramanian
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Gender Equality, Inclusivity and
Corporate Governance in India
Published in Journal of Human Values 2003, (19:1) 15-28
DOI: 10.1177/0971685812470327; http://jhv.sagepub.com

N Balasubramaninan
Gender Equality and Inclusivity Bala Journal of Human Values

Gender Equality, Inclusivity and

Corporate Governance in India

_________________________________

“It is thoughtless to condemn [women], or laugh at

them, if they seek to do more or learn more than
custom has pronounced necessary for their sex.”
―
Charlotte Brontë, Jane Eyre
_________________________________

Equity, equality and inclusivity have been themes of abiding interest to philosophers,
politicians, social reformers and activists alike. In the modern Indian context of political and
social reformation spearheaded by Gandhi during the first half of the twentieth century, the
imperatives of mainstreaming women in public and private spheres of activity was a theme
that engaged his serious concern. Not to give women their due share of responsibility and
authority was to him as much a case calling for greater inclusivity as was the exclusion of vast
proportions of the population from equal opportunities based on other legacy prejudices of
caste, creed, and so on. Despite remarkable progress in many other spheres, countries in
general are still way behind in rectifying the gender inequalities that still persist. This paper
discusses, within the broader framework of equality and inclusivity, the theme of women in
corporate governance with particular reference to India.
Corporate boards, a key instrument in governing corporations, are still too thinly populated
with women directors; there is comparatively little representation of women in positions of
influence and importance within the bureaucracy associated with corporate legislation and
market regulation;1 active involvement of women in the policy making legislative bodies like the

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parliament and its committees as well as in the ministerial ranks in post-independence India has
been is minimal. This situation calls for speedy correction in developing countries like India
which can arguably benefit most from such inclusion.

The rest of the paper is organized as follows: section I offers an understanding of the concepts
of equity, equality and inclusivity; section II provides a brief description of corporate
governance, the role of boards, and the imperatives of diversity including gender inclusivity in
their composition to enhance their effectiveness; section III provides some evidence of women
on boards internationally and in India; and section IV concludes with a review of recent
developments in this field and a suggested Indian agenda for the future.

I
Equity, Equality and Inclusivity

Inclusivity is a concept that connotes active involvement of the largest number of people both
in the creation and sharing of wealth and prosperity to the greatest equitable benefit of all.
Such wellbeing and happiness are dependent upon the adequate and timely production and
delivery of goods and services at affordable prices; this role is assigned by society to firms and
individuals among their number to efficiently produce and effectively distribute to concerned
segments of buyers in need. Thus licensed and sanctioned by society, business – especially in
the corporate format - has its purpose well set out and can proceed to carry out its operations
to fulfill societal objectives, even while in the process earning an attractive return for its
shareholder owners. Failure to align corporate initiatives with the inclusivity objectives of the
state will likely lead in course of time to an impairment and erosion of corporate freedom of
choice to govern itself. As a government sponsored report on women on boards in the UK
admonishingly noted, “Government must reserve the right to introduce more prescriptive
alternatives if the recommended business-led approach does not achieve significant change.”
(UKG 2011, p. 2).

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Inclusivity and Gandhian thought are inseparable. Running right through the entire spectrum of
the principles he preached and lived by – political, social or religious– was the inalienable
theme of carrying every one equitably along on the path to political and economic freedom. In
a sense, his consistent and continuing opposition to the partitioning of the country in August
1947 based on religious majorities was a shining example of his attempts to retain an inclusive
nation of diverse religious faiths but a single politically integral nation. Similar was his attempt
to bring in the socially disadvantaged in to the mainstream of Hinduism, coining in the process a
remarkably uplifting label, harijans (God’s children), to describe the untouchables as a group.

In the context of women in corporate governance, two main themes are identified for
discussion: equity and equality, and women’s parity with men.

Towards Equity and Equality

Often used interchangeably, these two terms have assumed different connotations and been
the subject of discussion among scholars around the world. A dictionary2 definition (relevant to
this discussion) of equity is “the quality of being fair and impartial” and of equality is “the state
of being the same in quantity, size, degree, value or status.” Much as one might wish for a
society untainted by any trace of inequality among its constituents, the reality is a continuing
breach of this noble ideal. Despite the common cliché that all men (and hopefully all women,
too) are born equal, it is a harsh fact of life that some are seen to be more equal than the rest;
this invidious man-made distinction leads to the creation of societies with unequal
memberships in terms of their social status, developmental capabilities, eligibility for
opportunities, even matrimonial alliances,3 and so on. Especially in the Indian context, Gandhi
readily appreciated these deep rooted prejudices that afflicted a vast majority of his
countrymen and persistently argued for eradicating such inequalities. In this, as in many other
themes, Gandhi perhaps drew inspiration from the Bhagavd Gita,4 his constant companion in
decision making, that postulated equality of all beings, “sarvatra samadarsanah, ‘one who sees

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equality everywhere’ .. [This] must inspire our people to make us part from caste and creed
differences to true democracy in the socio-political field,” (Ranganathananda 2000, p.152). This
is the kind of counsel that admits of no exceptions or selective exclusions that Mary
Wollstonecraft (1790), the radical British activist of the 18th century charged the noted
parliamentarian Edmund Burke (1790) of indulging in when he spoke in support of the French
revolution as protecting the liberty of men and yet maintaining a deafening silence on the rights
of American slaves even while defending the rights of the non-slave population for
independence from the British. To her, “it is unsustainable to have a defence of the freedom of
human beings that separates some people whose liberties matter from others not to be
included in that favoured category” (Sen 2009, p.116).5

Equity on the other hand would call for fairness and impartiality in sharing or allocating scarce
opportunities to achieve desired social outcomes. If bringing into the mainstream sections of
the citizenry that have been excluded for legacy reasons is (and ought to be) the desired social
objective, steps will have to be taken to remove the barriers that sustain such exclusion even if
in that process the already included sections of the population have to undergo some privation
and denial of just opportunities, exemplifying what Little (2003, p.60) said about “a government
must be socially unjust in order to be socially just.” Reasonableness of such provisions would
always remain subjective but in the hands of “reasonable persons”6 there is a greater
probability of arriving at conclusions that are generally seen as fair and equitable.

Governments in pursuit of such social objectives resort to a diverse range of measures that
have been variously described as affirmative action, positive discrimination, compensatory
discrimination or preferential policy, each with largely common but conceptually different
connotations.7 While each of these may be justified on political and social grounds (and India
has more than its due share of reservations and preferences that can be categorized under one
or the other of the above labels), the key is to ensure that the overall size of the different
beneficiary groups is not so large as to defeat the very purpose of such reservations to the most
deserving among them.8 Gandhi’s Harijans were (and still are) undoubtedly the most deserving

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of the entire Indian population because of the centuries of oppression, abuse, and isolation that
were inflicted upon this group by the rest (including many of the groups that have now sought
and obtained preferential treatment for themselves!). It is noteworthy that Gandhi strove for
the eradication of this segregation of untouchables from the Hindu mindset by encouraging
their absorption in mainstream livelihoods, not by any reservations or quotas, since he knew
that the scourge of untouchability nurtured over centuries will not go away by legislative
mandate but only through a change of heart and personal conviction of others as to its
barbarism in any civilized society. He led by personal example: by staying with Harijans
whenever and wherever he could, by admitting Harijans in to his ashrams and making sure the
codes of conduct did not permit any intolerance or indignity towards them by any of the
inmates, personal family included, and so onEquity and equality are still proving elusive. On the
positive side, Gandhi also signaled a great message: not to be daunted by the enormity of a
problem but to start tackling it with firm conviction that no problem is intractable. His
approach to the aggrieved was one of empathy rather than patronage: the virtue of care
counsels reconciliation through communication and understanding rather than coercive
response (Kupfer 2007, p.6). He believed problems like untouchability can only be addressed by
instilling self-respect and confidence in those oppressed and persuading and convincing those
wittingly or otherwise continue to sustain and even strengthen this malignant crime against co-
humans. Much of this wisdom is equally applicable to gender related issues as well.

Women’s Parity with Men

Closely following her scathing criticism of Edmund Burke on his double standards of freedom
for the French and the Americans excluding their slaves, Mary Wollstonecraft turned to the
other anomaly of women not being treated on par with men when it came to freedom and
other rights. Her book, A Vindication of the Rights of Women (1792), questioned how one can
defend the rights of men without concurrently taking a similar position on the rights of women.
More than half a century later, John Stuart Mill (1869) wrote his now-famous book, The
Subjection of Women, arguably the first such treatise by a male on the unfair treatment of
women in society. Mill assigned the so-called “disabilities” attributed to women (as a

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justification for denying them equal opportunities) to the overarching obsession of men to
retain their dominance over them. “Were it not for that, … almost everyone … would admit the
injustice of excluding half the human race from the greater number of lucrative occupations,
and from almost all high social functions; ordaining from their birth that they are not, and
cannot by any possibility become, fit for employment which are legally open to the stupidest
and basest of the other sex … “, he contended (Loc. 865 of 1783). Counseling his fellow humans
on the need to mitigate if not totally eliminate the disparities between men and women, Mill
commended: “one feels that among all the lessons which men require for carrying on the
struggle against the inevitable imperfections of their lot on earth, there is no lesson they more
need, than not to add to the evils which nature inflicts, by their jealous and prejudiced
restrictions on one another” [Loc. 1766 of 1783]. Much of this sagely advice of course fell on
deaf years; even the great French revolution of the time that was predicated on the noble
principles of liberty, equality and fraternity failed to recognize any role for gender parity.

Notwithstanding the general experience of similar antipathy in India towards women’s equality
issues, there is some evidence in the Indian scriptural tradition emphasising gender equality
and the obligation of the state to protect women and their interests. In The Mahabharata,9
Bhishma counsels King Yudhishthira to always protect women, from those who deceive and
take advantage of them (Badrinath 2006, p.308).10 The Bhagavad Gita refers to, “cherishing one
another, [gaining] the highest good.”11 Swamy Ranganathananda (2000, p.270) commenting on
this verse that commends mutual respect and recognition as a fundamental building block for
human growth and prosperity relates this sentiment to gender equality as well and quotes
Betty Friedan, the famous feminist and liberationist, saying “there is no women’s liberation
apart from men’s liberation.” The import of this profound observation is testimony to the
mutually non-exclusive nature of men’s and women’s equality; in the absence of one, the other
is unsustainable.

Gandhi was unequivocal in his view that women were entitled to equality of treatment in all
walks of life as men were. “Woman is the companion of man,” he wrote, “gifted with equal
mental capacities. She has the right to participate in every minute detail in the activities of man

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and she has an equal right of freedom and liberty with him.” (Gandhi 1967, p. 280) He was
often very critical of men not having “been fair and discriminating in performing their self-
appointed task of legislating;” he had counseled that “in promoting the regeneration of women,
efforts should be directed towards removing those blemishes which are represented in our
shastras as the necessary and ingrained characteristics of women” (Gandhi 1947, p. 187). And
yet, Gandhi had some strong reservations on what women could and could not do: “Equity of
sexes does not mean equity of occupations. … Nature has created sexes as complements of
each other. Their functions are defined as are their forms” (Gandhi 1947, p.188). A half century
later, women seem to be defying this Gandhian assertion. They are no longer “instinctively
recoiling” from the functions that were once identified exclusively with men, as can be seen
from the significant forays they have made into traditional male bastions such as top
management, banking, information technology, politics, armed forces, police, space
exploration, and so on. Indeed, men seem to be making amends, albeit at glacial speed in most
cases, for their past inequities towards women: adult suffrage ensuring equal voting rights in
elections, proposed reservation of a third of parliamentary memberships12 and the proposed
mandatory inclusion of women on corporate boards of directors, just to mention a few. Women
in the workforce both in urban and rural areas have increased their participation and
contribution, often despite dissonance and discouragement from their male colleagues and
supervisors.

II
Corporate Governance, the Board and Gender Diversity

Apart from the arguments for gender inclusivity on grounds of fair rights and social equity,
there is another, positive dimension justifying women’s presence on corporate boards as a
contributing business imperative. We now briefly discuss the role of boards in governing
corporations and how their composition (including gender diversity) could actually benefit the
corporations.

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Understanding Corporate Governance

The Cadbury Committee (1992) that was to trigger and influence developments in the field of
corporate governance in several countries in the decade following, defined corporate
governance in the UK as, the "system by which companies are directed and controlled", thus
placing the board of directors of a company in the centre stage of the governance system. Two
decades later, the UK Corporate Governance Code (FRC 2012, p. 1) acknowledges this “as still
the classic definition” and indeed with good reason. The Canadian guidelines that followed in
1994 (TSE) introduced the concept of stewardship as the role of corporate boards and
expanded the business dimensions of good corporate governance. In India, the Kumar
Mangalam Birla Committee Report13 recognised that the “fundamental objective of corporate
governance is the enhancement of the long-term shareholder value, while at the same time
protecting the interests of other stakeholders” (emphasis supplied). The 2003 SEBI
[Narayanamurthy] Committee on Corporate Governance was even more specific in its
references to the need to include stakeholders as major contributors to the development and
prosperity of the company.

In theory,14 the shareholders “elect” directors to look after their interests and collectively this
group of people are called the board; all the authority in respect of the company and its
activities (subject only to the laws of the land) vest in this body which alone is empowered to
exercise that authority and at its option delegate that authority in part to someone of their
choice in the board or outside. The executive thus delegated with authority to run the day to
day affairs of the company under the control, guidance and supervision of the board takes
charge accordingly and the board will exercise its supervisory and oversight authority to satisfy
itself on the performance of the executive.

Such is the power of the board in governing corporations. Of course, this power is
concomitantly circumscribed by two important caveats: first the directors have a duty of care
and second, of loyalty towards the shareholders as a whole whose elected representatives they
are. The duty of care requires them to bring to bear on all their deliberations and decisions the

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best of their acumen, expertise and wisdom such that the company and its shareholders would
benefit. The duty of loyalty imposes on them on obligation that they will always act in the best
interests of the company and all its shareholders, they will not seek personal gain at the
expense of the interests of the shareholders, and they will not engage in self-dealing, wrongful
appropriation of corporate wealth, assets and opportunities for their benefit or their
associates’, and such other practices which are detrimental to the interests of shareholders.

The board in this frame work has a three dimensional role: to contribute to the achievement of
mandated objectives of wealth creation, to counsel executive management in their mission and
to control the operation such that created wealth and wealth creating assets are protected and
eventually distributed to or held for the ultimate risk bearing owners. A truly effective board
must have the requisite skills, wisdom and domain expertise to discharge these onerous
responsibilities. This task is greatly facilitated by ensuring an appropriate composition of the
board that would have the necessary competencies to fulfill these obligations. At the same
time, it is unrealistic to expect all three role-competencies in equal measure in all members of
the board. A carefully choreographed team with each member bringing these attributes in
different degrees and complementing each other is what one should aim for in board
composition. It is also in this context that board diversity in terms of gender, ethnicity, age,
experience and domain disciplines assumes significance. Contrary to a non-diversified board
that would think more or less similarly on issues leading to a false consensus effect where
decisions may not necessarily be the best, a suitably diversified board will encourage protracted
discussions and disagreements eventually leading to more informed, balanced and therefore
better results. Constructive dissonance thus may be more productive than contrived cohesion.
Overall, theoretical research postulates that diversity in board composition is conducive not
only to improving shareholder returns (because of their favourable impact on the quality of
strategic decision-making and monitoring) but also, perhaps more importantly, to enhancing
stakeholder engagement and consequently stabilizing and improving the potential for
sustainable growth for the corporation.

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The need for diversity is increasingly being recognized as a necessary component of good
governance. Illustratively, in the United States, effective February 28, 2010, the SEC requires
corporate boards of publicly held corporations to disclose in their proxy materials more
information about how diversity factors into board member nominations. The stated purpose
of the rule is to provide investors with information on corporate culture and governance
practices that would enable investors to make more informed voting and investment decisions
(Burch 2011). In the United Kingdom, its Corporate Governance Code (2012, Para B.2.4)
stipulates: “A separate section of the annual report should describe the work of the nomination
committee, including the process it has used in relation to board appointments. This section
should include a description of the board’s policy on diversity, including gender, any
measurable objectives that it has set for implementing the policy, and progress on achieving
the objectives.” So far, in India there is no such requirement imposed on companies (although
there is a proposal in the Companies Bill, 2011 pending before the Indian parliament, to require
at least one woman director on the boards of companies in the categories prescribed by the
government).

The Gender Issue in Board Diversity

While the relatively poor representation of women in executive ranks in corporations has been
the subject of serious study for several years, the problem appears to be even more acute at
board levels. Cadbury (2002) supported induction of more women on to corporate board for
the following reasons. “The responsibilities which many women carry in voluntary organizations
and public life will have given them a different type of experience from executives; as a result,
they can bring a particular kind of value added to a board... They [boards] will gain from having
directors with a wider spectrum of viewpoints than in the past, in line with the wider interests
which they are now being called upon to take.” These perceptive observations apply even
more strongly to emerging economies like India, as businesses have to cope with the twin
challenges of operating profitably in a more competitive international environment and
ordering their activities so that they are fully in accord with the more demanding societal
expectations.

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The Tyson Report (2003) on non-executive directors in the UK had advocated a larger
representation for women on company boards in the United Kingdom. This support was based
not so much on the gender-agenda but more on the kind of skills and experience from the non-
commercial sector and the relatively soft fields of human resources, communication,
advertising and other such functions that women were perceived to bring to the table in larger
measure than men.

The Davies Report (UKG 2011) cites a number of research studies throwing light on ways in
which women directors help to improve corporate performance; among them: Female directors
enhance board independence (Fondas and Sassalos 2000); Women take their non-executive
director roles more seriously, preparing more conscientiously for meetings (Izraeli 2000);
Women ask the awkward questions more often, decisions are less likely to be nodded through
and so are likely to be better; similar board members, with similar backgrounds, education and
networks. Such homogeneity among directors is more likely to produce ‘group-think” which
women can avoid (Huse and Solberg 2006); Women bring different perspectives and voices to
the table, to the debate and to the decisions (Zelechowski and Bilimoria 2004). While these and
other such advantages of women on boards would certainly improve board decisions and hence
arguably company performance, establishing such direct causal impact is not easy
(Balasubramanian 2011b). There are research claims that a minimum of three women on a
board constitutes a critical mass with capability to influence board performance but
experiential support is hard to come by; for example, as K V Kamath, a decorated CEO with a
reputation of having successfully developed numerous top level women executives and
directors, and currently chairman of Infosys and ICICI Bank, India’s market leaders, comments,
“Irrespective of the gender, if the person is selected after the due process (as described) and
brings to the role the required maturity and experience, she/he is able to contribute,” thus
laying the emphasis on competency rather than their gender (Balasubramanian and George

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2012). As noted earlier, a critical component of any worthwhile long term inclusivity initiative
must be capacity and confidence building in the people.

The second ground on which the gender agenda for boards is advocated is based on social
justice and equity. Inclusivity is a keyword in political and developmental discourse not only in
developing countries but also those that qualify as already developed. While this very desirable
objective is usually articulated in the context of uplifting socially disadvantaged sections of
society, the principle is universal in its application. Wherever there are opportunities, every
one eligible and qualified must receive fair and unbiased consideration. Concomitantly, this also
implies taking the task seriously of ensuring everyone willing and able is appropriately equipped
to qualify and be eligible for such consideration. And in the meantime, some affirmative actions
can help to get on to the mainstream most of those so excluded (Balasubramanian (2011a).

The fact is that that numerically the population of males and females in societies is largely equal
but in terms of opportunities – for education, employment, and other fruits of development –
the genders are rarely, if at all, treated equally anywhere in the world. Corporate board
membership is no exception. Other things being equal – in terms of suitability and
competencies – there should be no justifiable reason for any gender bias against women. But in
practice, this logic does not seem to hold. Part of the reason is of women’s own making:
virtually all women tend to opt out of opportunities so as to be able to bring up their families
and in the process lose out on both counts – career advancement and competency building
through education. Compounding this is the almost universal bias against women when filling
up executive and board positions, partly because of the male-dominated selection processes.
Mentoring also seems to thrive on same-sex selections: men tend to mentor and promote
other men, while in case of women this facility is limited because of fewer female mentors in
senior positions. Besides, women also intuitively dislike getting close to their male mentors and
bosses where available for fear of possible societal disapproval and potential reputational loss.
Sponsorship, which often involves an older, married male spending time with a younger female,

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can look like an affair--and the wider the power gap between them, the greater the risk to both
parties. In short, sponsorship can be misconstrued as sexual interest, so ambitious women and
highly placed men avoid it (Hewlett, et al 2011).

And yet, many women have dared and broken through these hurdles to reach top echelons of
corporate hierarchies. Admittedly, the numbers are quite small in comparison to their male
counterparts but their success serves as role models and augurs well for the future.

III
Women on Indian Boards

The two principal stock exchanges in India are the Bombay Stock Exchange and the national
Stock Exchange, both headquartered in Mumbai, often referred to as the commercial capital of
India. Between them, virtually every listed company in the country is covered. Their prestigious
market indices, the 30-company BSE Sensex and the fifty-company Nifty, cover a significant
proportion of market capitalisation in the country. For the purposes of this paper, the director
statistics of these two exchanges are considered.

Out of 1112 director seats on the BSE-100 boards in 2010, just 59 or 5.3% were occupied by
women. This compares unfavourably with the Canada – 15.0%, US – 14.5% and UK – 12.2% (SCB
2010).15 Eight of these were executive or whole time directors. Thirteen of the BSE-100
companies have family-based boards; four of the 13 have women on their boards, including the
only female board chair in the BSE-100.

A similar count of directors on the Nifty Index companies as of March 2012 revealed: total
number of director seats – 718, of which executive directors were 201, Non-executive
independent directors were 321, and Non-executive non-independent directors were 196. Of

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these 718, women held 32 board seats in all, four executive and 14 each of non-executive
independent and non-independent category. This translates into 4.46% of the total board seats
in these companies (Balasubramanian and Anand 2012).

These numbers compare unfavourably with many other countries: Norway at the top with
40.1%, followed by Sweden and Finland respectively with 27.3% and 24.5%. China with 8.5%
and Malaysia with 7.8% are still ahead of India’s 5.3% as reported in a 2012 Catalyst study
based on 2011 numbers. UK (CSM 2012) reportedly has made significant progress in recent
years, female directors having reached 15% on the prestigious FTSE 100-company board seats
in the UK as of December 2011; comparable numbers in 2009 and 2010 were 12.2% and 12.5%.
Much credit for this spurt is attributed to the 2010 Davies Report which exhorted (with an
understated threat of government mandate if not reasonably responded to) top companies to
improve their gender diversity on boards in pursuance of government policy.

In reviewing boards, directors and other corporate governance related matters, the pattern of
ownership and control of Indian companies needs to be kept in view. Unlike the US and UK with
their predominantly distributed share ownership, shareholdings in India are overwhelmingly
concentrated in the hands of sponsors or promoters, with such dominant shareholder groups
generally also being in operational control of the businesses directly or through their
appointees. As of December 2011, 24 of the 50 Nifty index companies on the National Stock
Exchange were owned and/or controlled by dominant shareholders in the domestic private
sector groups and families (Balasubramanian and Anand 2012a). Board positions in such cases
are more often than not assigned on filial and relationship considerations rather than on wholly
merit-based criteria. Another ten companies were dominantly owned and controlled by the
State where again board appointments are subject to numerous patronage and political
considerations (Balasubramanian and Anand 2012b). Whether or not women (as much indeed
as men) finding themselves on boards on this basis can and do bring in the perceived benefits
of gender diversity is open to debate.

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IV
The Agenda Ahead

It is thus clear that gender equality and inclusivity in corporate governance in India is in urgent
need of some positive and strong initiatives. On grounds of equity and social justice, there is
every reason to ensure inclusion of women on company boards. Keeping potentially competent
and contributing people out of boards (as indeed in other walks of life) by reason only of their
being women is wholly unjustified and against all canons of natural justice. That they bring in
certain qualities and competencies not generally associated with men and as such they help to
bridge the gaps in board expertise and acumen is not seriously in question. Corporations would
thus be well advised to look for suitable female directors for their boards.

Closely associated with these discussions is the public policy issue of whether such gender-
based inclusions should be mandated by the state. Experience elsewhere has amply
demonstrated the futility of such impositions which lead to check-box compliance and lip
service to the cause but little else.16 Invited gender-based directors are any day likely to be far
more effective than the imposed variety.

Nevertheless, governments have a job to do in the perceived interests of the people they
govern. Social equity demands that women be provided equal opportunities in all walks of life
and corporate boards cannot be allowed to be a privileged exception. Several countries have in
fact already moved or planning to move towards varying degrees of legislated gender-based
board membership (GMI).17 But opinions vastly differ on the efficacy of such mandates and
their compliance-in-spirit rather than only in letter. As the Economist (2011) points out:
“Quotas are too blunt a tool … The women companies are compelled to put on boards are

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unlikely to be as useful as those they place there voluntarily. Quotas force firms either to pad
their boards with token non-executive directors, or to allocate real power on the basis of sex
rather than merit. Neither is good for corporate governance. Norway started enforcing quotas
for women in 2006. A study by the University of Michigan found that this led to large numbers
of inexperienced women being appointed to boards, and that this has seriously damaged those
firms’ performance.” In a country like India with its predominance of family controlled
businesses, it is more than likely that boards would get populated with unwilling or unsuitable
women from the family in the name of compliance.

Policymakers would be well advised to take heed; rather than foisting artificial numbers on
corporate boards, it may be more prudent to ensure that appropriate opportunities are
provided to interested women to qualify for board membership. More important than focusing
on outcomes (as unfortunately most of our affirmative action initiatives do), the emphasis
should be no building capacity by appropriate inputs. Equality of opportunity is more the need
of the hour than some fruitless equality of outcomes. Developing employability as a board
member is probably more potent instrument of state policy of achieving all round inclusivity
rather than just ensuring employment as a director in the short run. A policy initiative that
mandates an independent nominations committee of the board and a transparent discussion of
how that committee goes about its job of building a balanced board – with diversity of
competencies, skills, and experience of value to the company – and the processes adopted
would possibly be a good beginning.

This is precisely the approach that the UK corporate governance code has adopted: Code
provision B.2.4 stipulates, “A separate section of the annual report should describe … the
board’s policy on diversity, including gender, any measurable objectives that it has set for
implementing the policy, and progress on achieving the objectives.” In the US, from proxy
solicitations on February 28, 2010 onwards, SEC required companies to disclose whether
diversity was a factor in considering candidates for nomination to the board of directors, how
diversity was considered in that process, and how the company assessed the effectiveness of its

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Gender Equality and Inclusivity Bala Journal of Human Values

policy for considering diversity. Although initial reports seem to indicate a checkbox-ticking
approach by several companies, this is recognized as a first step towards highlighting the
importance of enhancing diversity in American boards (Aguilar 2010).

Indian policy makers at the legislative and regulatory levels may also consider proposing apply-
or-explain kind of guidelines on gender diversity on corporate boards. It is more preferable than
any imposition by law of women representation that might prove dysfunctional in the longer
run. Also, women who wish to get on to corporate boards would presumably like to believe
they did so by virtue of their competence and contributory potential (maybe with some gentle
nudging of the companies by the government) rather than being seen as people who didn’t
belong there but had to be suffered because of some statutory whip. If corporations do not
respond positively to such gentle persuasion and if as a consequence much more invasive and
peremptory legislation had to follow, then the companies will have only themselves to blame!

_______________________________

References

Acharya, Ashok (2008), Affirmative Action for Disadvantaged Groups – A Cross-constitutional Study of
India and the US, in Bhargava (2008)
Aguilar, Luis A (2010), Diversity in the Boardroom is Important and, Unfortunately, Still Rare, remarks at
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Arnaud, A J (2001): Equity, in: International Encyclopedia of Social and behavioral Sciences, N. J Smelser,
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New Delhi

Balasubramanian N (2010), Corporate Governance and Stewardship: Emerging Role and Responsibilities
of Corporate Boards and Directors, Tata McGraw-Hill, New Delhi

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Balasubramanian, N (2011 a), Corporate Ethics & Governance in an Inclusive growth Framework, Indian
Journal of Industrial Relations – A Review of Economic and Social Development, Vol. 46, N0. 4, pp. 571 –
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Balasubramanian, N (2011 b), Glass Ceilings and Oak-Paneled Walls: Women on Corporate Boards, Prime
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Balasubramanian, N and Anand Ramaswamy (2012 b), Board Composition & Structure of Major Listed
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Balasubramanian, N and Rejie George (2012), Corporate governance and the Indian institutional context:
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Bank, IIMB Management Review, September, Elsevier, New Delhi

Bhargava, Rajeev (2008), Politics and Ethics of the Indian Constitution, (ed). Oxford University Press, New
Delhi
Boswell, James (1791), The Life of Samuel Johnson, 1992 Everyman’s Library Edition, David Campbell
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Burch, Regina F (2011), Worldview Diversity in the Boardroom: A Law and Social Equity Rationale, Loyola
University Chicago Law Journal (Vol. 42) pp. 585-628

Burke, Edmund (1790), Reflections on the Revolution in France, in The Works of the Right Honourable
Edmund Burke, Vol 3, Kindle Edition, Amazon

Cadbury, Sir Adrian (1992), Report of the (Cadbury) Committee on the Financial Aspects of Corporate
Governance in the United Kingdom, Gee, London

Cadbury, Sir Adrian (2002), Corporate Governance and Chairmanship: A Personal View, Oxford University
Press

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Census (2011), Census Data Summary, Office of the Registrar General & Census Commissioner, Ministry
of Home Affairs, Government of India; http://censusindia.gov.in/2011-common/
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CSM (2012), Female FTSE Board Report 2012 – Milestone or Millstone? Cranfield School of Management,
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Directors Affects Board. Influence over Management, Global Focus , 12: 13-22.

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Ahmedabad

Gandhi, M K (1929), Bhagavad-Gita: The Song of God, 2002 edition, Grange Books, Hoo nr Rochester

Gandhi, M K (1947), India of my Dreams, Compilation by R K Prabhu, Navajivan Publishing House,

Ahmedabad

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Notes
1
Illustratively, the capital markets regulator, Securities and Exchange Board of India, during the decade 2003 -2012
had a total of 78 board members, only five of whom were women. In six of the ten years, there was no woman at all
on the board. Similarly, the National Stock Exchange, the country’s top institution of its kind, had during the same
decade 2003-2012, a total 175 directors serving on its board; of these only 20 were women directors. To its credit, in
every one of those ten years, it had at least one woman director even if it was the deputy or joint managing director
.
2 th
Concise Oxford English Dictionary pp. 481, 483, 11 Revised Edition (2008), Indian Edition (2009), Oxford
University Press

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3
Volumes have been rightly written on the evils of the Indian caste systems prohibiting, among other things, inter-
caste marriages but it must be mentioned that such prejudices are not the exclusive preserve of the country.
Illustratively, Victorian prejudices on such issues in the UK were no less stringent. For example, Samuel Johnson,
the noted eighteenth century litterateur and lexicographer had this to say on a women marrying beneath her
social status: “Were I a man of rank, I would not let a daughter starve who had made a mean marriage; but having
voluntarily degraded herself from the station she was originally entitled to hold, I would support her only in that
which she herself had chosen; and would not put her on a level with my other daughters. … [It] is our duty to
maintain the subordination of civilized society; and when there is a gross and shameful deviation from rank, it
should be punished so as to deter others from the same perversion.” (Boswell 1791, pp. 531-2)

4
Especially, verse VI-29 : he sees himself in all created things, and all created things in himself; so I must behave
towards all created things in the same way as I would behave towards myself (Tilak 1935, p.538)
5
Amartya Sen has commented on the huge reach of this argument applying to numerous instances of inequality,
among them the status of untouchables in India and non-whites in apartheid-based South Africa (2009, p.116, fn)
6
After discussing Rawls’s definition (whose favourite expression this was) and others’, Amartya Sen suggests the
following: “being open minded about welcoming information and through reflecting on arguments coming from
different quarters, along with undertaking interactive deliberations and debates on how underlying issues should
be seen” (2009, p. 43)
7
For a concise description, see Acharya in Bhargava (2008, pp. 267-68)
8
Thankfully, a 1963 Supreme Court decision in Balaji vs. State of Mysore had set a ceiling of 50% for all
reservations in the aggregate
9
Anushasana Parva, Verse 43.19
10
This admonition is further strengthened in later verse (46.14) by a statement, a kind of obiter dictum that has
been interpreted variously: “For woman there is no independence since she is [to be?] protected by her father in
childhood, by the husband in her youth, and by the son in her old age” (Badrinath 2006, p.309). In the contextual
setting this verse is placed, it would seem more appropriately to allude to a woman’s vulnerability in society thus
justifying the obligation of the State to offer overall protection to all women
11
Verse 3.11. The Sanskrit expression, Parasparam Bhavayantah, would literally mean mutually cherishing each
other (Gandhi 1929, p.37), which is possible only among equals and not between superiors and inferiors
12
It is not clear why the reservation figures have been capped at 33% of the parliamentary seats. According to 2011
Census figures, females constitute 48.44% of the population; and if one were to go by literate population, they
constitute 42.94%. One would have thought the reservations should have been closer to 50%! It is another matter
that even the 33% proposal is not yet through.
13
Report of the Kumar Mangalam Birla Committee on Corporate Governance (2000), Securities and Exchange
Board of India
14
In practice, it is the sponsoring promoters through the board mechanism who propose names to the shareholders
in general meeting for election. Partly out of generic inertia but mostly because of the voting strength of the
promoters, their nominations are generally elected without too much resistance

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15
For a detailed discussion on gender boarding and some international comparisons, also see Balasubramanian
(2010 pp. 129-131 )
16
Mandating independent directors for listed companies is a case in point
17
A GMI sourced international comparison of gender-based initiatives is available at the 30% Club web site,
http://www.30percentclub.org.uk/research/international-comparison

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