Indian Experience of CSR and Corporate Governance in the Post-liberalised Era

Introduction

The business environment is changing rapidly owing to enormous upheavals in the globalised world economy. Business is reorienting and readjusting itself in response to the changing macro-economic circumstances under the influence of neoliberal policies of privatisation and globalisation. Transparency, predictability, accountability and responsibility are becoming new buzzwords for inviting fluid and highly speculative foreign investments in a particular country. To ensure profitability, governance structures are accordingly restructured to the particular needs of global investors.

A stable, predictable and accountable business environment essentially depends on internal and external governance structures. Internal governance mechanisms include the board of directors appointed by shareholders within the broader public policy framework on corporate governance (CG) laid out by the government. Board directors further make the necessary arrangements to run the business entity. External governance mechanisms include regulation and supervision through regulatory bodies and other requisite laws. Also, it must be noted that internal governance structures are dialectically interrelated to the external governance mechanisms. Thus, both help to shape and reshape each other.

Frequent frauds and scams in India have shattered the trust and confidence of investors and the general public. Therefore, the business community has been forced to look beyond the narrow confinements of the self-interested shareholders’ approach advocated by Milton Friedman of the Chicago School of Economics, who says that the ‘only aim of business is to make profit’. ‘It is no longer enough to know how profits are used but rather how they are made’. Thus, the traditional shareholders’ approach of business organisations is being replaced with the stakeholders’ approach in their attempt to deal with the governance crisis emanating from the agency problem. A critical investigation into how profits are made can help to create an eco-system where corporate entities behave responsibly and CG mechanisms ensure the accountability of businesses. It can help to tap the emerging synergy between CG and corporate social responsibility (CSR). Such a synergy begins to reflect in a theoretical paradigm and new CG structures (Money & Schepers, 2007). Fair trade practices and effective regulatory mechanisms can provide incentives to business enterprises, irrespective of their size and power, to behave ethically and responsibly. When the legal and regulatory environment provides a level-playing field, companies are legally, morally and ethically bound to voluntarily take CSR activities while adhering to best CG norms. Therefore, theoretically, it prepares a ground where CSR and CG can play complementary roles in strengthening and promoting ethically and socially responsible and sustainable growth through self-regulation. For voluntary CSR, self-regulation and responsible governance structures are prerequisites.

Theoretical Interfaces

Corporations hold enormous social power on the basis of their economic dominance. More power demands more accountability and responsibility. Out of this compulsion, corporations have started taking interest in CSR and CG to be seen as ‘socially responsible law abiding corporate citizens’. There are several reasons for this newfound interest in CSR and CG. These include the social and economic power of business, the tendency of wealthy commodified societies to protect or conserve their cultures and value systems and the separation of ownership and management (Davis & Blomstrom, 1966). Another important reason is to build trust and restore faith in business amid many high-profile frauds and corporate malfeasance.

Carroll (1979) stated that CSR as ‘Social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organisations at a given point in time’. Therefore, CSR is supposed to promote social, legal, environmental, ethical and other considerations in everyday business life, whereas CG provides these legal structures and binds corporations to implement the CSR agenda. In fact, it is through CG machinery that companies can be encouraged to follow best governance practices. Hence, Bhimani and Soonawalla (2005) have rightly pointed out that there is a definite connection between CG and CSR.

There is an ongoing debate on whether companies should be held responsible for the adverse impact of their activities on their different stakeholders. This debate on ‘for and against’ CSR has given birth to two theoretical paradigms in the CSR literature. These are the shareholders’ theory and the stakeholders’ theory. In fact, shareholders’ and stakeholders’ theories are common to both CG and CSR. The shareholders’ theory says that ‘there is one and only one social responsibility of business which is profit.’ (Friedman, 1962), whereas the stakeholder theory advocates that socially responsible corporations must incorporate the genuine concerns of all its stakeholders (Freeman, 1984). It will increase the wealth of the underlying corporation (Freeman et al., 2004).

It urgently demands that companies be directed and controlled to integrate society’s concerns into their business strategies. From this perspective, the theoretical integration of shareholders’ and stakeholders’ approaches are integral for effective, responsive and sustainable CG and CSR. Therefore, business organisations, along with other stakeholders, have a common interest in ensuring good CG and ethical business practices.

Apart from shareholders’ and stakeholders’ theories, agency theory also provides valuable insights into the working of corporations’ internal structures by bifurcating ownership and management to branch out planning and implementation essentially to ensure accountability. This theory has been central to the historical evolution of CG’s theoretical underpinnings and its practice. According to the Cadbury (1992) Report, agency theory is all about how corporations are ‘directed and controlled’. It is based on the theory of separation of ownership and management in large corporations. Berle and Means (1932) have cautioned against the dictatorship of management control over the company affairs by relegating its owners, that is, shareholders. This caution is important because a majority of shareholders are well dispersed and scattered and are in no way in a position to control or direct the affairs of a company. Thus, this warning of Berle and Means (1932) was against the concentration of wealth and, thereby, decision-making powers. It gave birth to principal-agent conflict. It helped to evolve a CG mechanism over the years albeit in favour of big monopoly capital all over the world (Clarke, 2004; Reich, 2016).

Critical theorist Banerjee (2008) vehemently criticised and presented a most powerful and convincing critique of capitalism and its various shades, like crony capitalism in contemporary times, by unmasking the real face of corporate houses, especially big corporations. He blamed corporations and their neoliberal proponents, academia and researchers for becoming ‘complicit, arguably even supportive’ in the commercial lust for profit without fail. With power and profit, corporations tend to expand without damn caring for means. Public policymakers and corporations have to take such a genuine critique of corporations seriously if they are to achieve sustainable development and tap the potential synergy between CG and CSR.

Morality and Politics of CSR and CG

The morality and politics of CSR and CG can be explained by the two diametrically opposite ideological strands, namely, capitalism and communism. Within the capitalist system of economic organisations, there are principally two common theoretical schools of CSR and CG, namely, shareholders’ and stakeholders’ theories, respectively, apart from the agency theory of CG. By and large, both schools tend to culminate in the end to justify ‘market morality’, that is to say, that a free market economy based on self-interest is designed to preserve the right to private property that serves the public interest better than any other economic model available, which leads to the optimisation of production and distribution through natural operations of the market.

On the contrary, the communist model of economic organisation keeps the collective good in the centre stage instead of ‘self-interested’ individuals and/or groups. It says that the capitalist model of the so-called free enterprises is based on the exploitation of labour and all talks about morality and larger public interests create illusions. The socialist model, on the other hand, argues that the capitalist model is devoid of morality and ethical values. It envisions a classless society by replacing the private property with common ownership over means of production under the leadership of the proletariat through a centrally-planned economy based on the principle of ‘each according to his ability and each according to his needs’. Therefore, Marxist and Critical theorists would dismiss CSR as a strategy employed by corporations just to reduce the role of government by using the false pretext of efficiency and economy and to hide its exploitative face.

The profit-mongering approach of lusty and vulgar consumerist capitalism hardly adheres to ‘self-regulation’, as usually propagated by the apologists of free-market capitalism, as easy entry and existence are some of the main conditions demanded by investors, particularly foreign investors. Also, foreign capital is presented as a panacea for all ailments in the economy, which is also not true as foreign investors invest their corpus where it could yield maximum return in less time and where the regulatory and legal environment favours monopoly capital. CG structures also are, therefore, specifically designed to aid the monopoly capital in its pursuits to exploit the rich resources and cheap labour power of a demand-driven market in the Third World or developing economies like India by forcing them to make a pliable legal framework conducive to foreign investments. Therefore, concepts like free-market economy and socially responsible business are myths in this age of neo-imperialism, and if a business has to progress sustainably and responsibly in the long run, then corporations (especially MNCs/TNCs) and policymakers need to address these genuine concerns posed by the distorted capitalist/imperialist development, particularly in Third World developing countries of Asia, Africa and Latin America.

Contextualising CG and CSR in India

Under changed economic conditions during the 1980s, the Keynesian prescription of the so-called Welfare State was replaced by the liberalisation–privatisation–globalisation (LPG) model under the theoretical leadership of Milton Friedman, who himself was a great admirer of Friedrich Hayek’s best-seller book The Road to Serfdom and Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations. Smith, Hayek and Friedman vehemently opposed central planning and eulogised Free Market Economy as the only available alternative to economic organisation. It deliberately pitched for relentless economic liberalism by promoting privatisation and globalisation amid the economic recession. Thatcherism in the UK and Reganism in the United States, respectively, initiated economic reforms along these lines by reducing the role of State intervention and privatising public sector units in order to deal with the prevalent chronic economic crisis. Wherever countries refused to accept neoliberal medicine prescribed by imperialist forces, these were classically bombarded. Chile, Iraq, Afghanistan and other Arab countries had been thrashed by imperialist powers led by the United States, apart from unilateral punitive sanctions against those refusing to toe the imperialist forces.

The Indian economy has become an appendage of global finance capital. It never refused to disobey imperialist injunctions. Subserviently, it started adopting neoliberal policies as an obedient follower of neo-imperialist forces like the IMF and World Bank, which have been largely dominated by the United States. IMF and other neo-imperialist institutions sanction loans, grant aids and provide technical assistance to control the fiscal and monetary policies of the emerging newly developing countries. All these loans and assistance are conditional and called a structural adjustment program (SAP). SAP essentially means neo-liberal prescription with regard to opening up economies for giant TNCs/MNCs.

India has been taking loans, grants-in-aid and technical assistance since the inception of neoliberalism. India took the biggest-ever loan from the IMF in 1980 to deal with the balance of payment difficulties, largely emanating from faulty import-oriented dependent economic policies that culminated in the severe balance of payment crisis in the 1990s and the pretext of which was used to introduce LPG policies dictated by the IMF. It was advertised as the TINA effect, that is, there is no alternative. Francis Fukuyama termed this neoliberal epoch as The End of History (Fukuyama, 2015). This neo-liberal order threw the Indian economy open to predatory foreign investments under the IMF’s structural adjustment programme. To implement neoliberal policies, new CG structures were required as old bureaucratic CG structures were deemed to be insufficient in the newly emerged market conditions. Apart from this, a large number of cases of fraud, big scams and irresponsible behaviour of business houses forced policymakers to take cognisance of these malpractices.

Practically, both CG and CSR are structural responses to the ‘collective wishes’ of the promoters and institutional investors within the broader policy framework of the capitalist society to ensure higher levels of ethical and moral standards. In theory, CG is the legal and ethical framework to ensure accountability and responsibility to all the stakeholders. Therefore, in theory, CG and CSR are said to be interlinked and inseparable from each other to ensure transparency, accountability and responsibility towards all stakeholders voluntarily without any external pressure; however, in practice, it serves the ‘collective wishes’ of the management of monopoly capitalists.

It is important that voluntary CSR should emerge from within through self-regulation, in conformity with moral and ethical values. Concerns for employees, customers, the environment and society must form an integral part of corporate philosophy and its conscience. Such concerned CSR philosophy can provide a needed filip to the ethical values. CG mechanisms can help to achieve such high ideals. CSR and CG can become complementary in such a situation. Academician and politician Jamali et al. (2008) pitched that progressive HRM, board stewardship and strategic leadership are common to the proposed synergy between CG and CSR through compliance and voluntary performance, respectively. They concluded that there exists a significant linkage between the two ascending fields of CG and CSR amid ‘increasing attention in the context of globalisation and escalating demands for greater accountability by companies’. Therefore, CG and CSR should not be considered as isolated or separate concepts but as intertwined and complimentary to each other. The synergy between CSR and CG must be in the DNA of corporate culture to ensure sustainable development. The synergy between CG and CSR has the potential to maximise the wealth of the shareholders by taking care of all other stakeholders (Beltratti, 2005; Zheka, 2005). An effective CG approach can help in promoting sound CSR practices that enhance accountability, transparency and disclosure expectancy of all interested groups (Kaymak & Bektas, 2008). These measures are important for promoting self-regulation and voluntary CSR compliance in a neo-liberal framework.

In quest of exploring the interconnection between CG and CSR, Harjoto and Jo (2011) tested four competing hypotheses. These hypotheses were the over-investment hypothesis, product signalling hypothesis, strategic choice hypothesis, and conflict resolution hypothesis. These attempted to explore the factual relationship between CSR, CG and firm value/performance. The over-investment hypothesis indicates that companies heavily invest in CSR to build brand value. The strategic choice hypothesis says that managers try to use CSR funds to secure and entrench their power positions. It justifies the claims of critics of principal-agent theory that agents do not work to maximise the shareholders’ value and instead work for themselves only. The product-signalling hypothesis attempts to explore the possibility of using CSR funds to diversify products in a competitive environment. The conflict-resolution hypothesis upholds that effective CG structures can help use CSR intervention to reduce the various contradictions among different stakeholders and can help increase the value of the firm in the market. They concluded that CG and CSR relationships are better explained by the conflict resolution hypothesis. CG is complimented by CSR interfaces when it amicably resolves the pertinent issues of different stakeholders.

The important point which needs added emphasis is that both CG and CSR must not necessarily be reduced to the mere legal sphere. Both are very much parts of ‘political process’ as corporations have become important actors in public policy-making by virtue of their monopolistic power. Following Jürgen Habermas’s political model of ‘Deliberative Democracy’, Ferraro (2019) contended that ‘corporate governance is fundamentally a political process’ and suggested that ‘it should embrace politicisation with responsibility’. It (political responsibility), if practiced in its letter and spirit, would positively contribute to ethical business practices and, thereby, strengthen CG and CSR synergy.

Corporate Governance Practices in India

The Indian corporate sector largely follows the Anglo-American model of CG as the Indian economy is largely dominated by American, British and European capitals. The Indian legal framework relating to CG is, thereby, structured on the pattern of the Anglo-American model of CG. There is enormous pressure from the monopoly capital to centralise regulatory and governance mechanisms to give effect to neoliberal economic policies. Corporate laws in India are pro-corporates, particularly pro-monopoly capital. Important stakeholders like workers, customers, the environment and society are at the receiving end. Nexus among the big capitalists, top elite bureaucrats and politicians shares the exploits. There exist persistent aberrations among various business regulations and enactments with respect to CG in India due to the dominance of monopolistic MNCs/TNCs, which creates confusion and increases compliance costs (Das, 2009). Som (2006) showed that ‘ownership concentration, prevalence of insiders and principal promoters, lack of protection for minority shareholders, lack of strict enforcement rights of regulatory authorities, disregard for disclosure norms and transparency are some of the features of Indian corporate governance regime’. The shareholders’ activism does not exist in reality, and stakeholders’ activism is a distant dream.

Rent-seeking behaviour also runs deep into the veins of Indian corporate life, riding piggyback on the unholy corporate–politician–bureaucratic nexus. Indian capitalists spend heavily on politicians and top bureaucrats to secure economic rights (Khan, 2000). Political parties in India are funded by big corporate houses to get a high rate of returns on their investments. Return on investment (corporates funding elections) is disproportional in the form of tax concession, easy environmental clearances even to hazardous projects, anti-labour laws, anti-farmer-land acquisition policy, anti-public sector undertaking (PSU) disinvestment policy, write-off of loans of big corporate houses and other bailout packages in the event of man-made economic crises. Jaffrelot et al. (2019) convincingly argued in their new book Business and Politics in India that ‘businesspersons are directly involved in policy making and it often leads to grand corruption’.

According to the RBI 2018–2019 Report, bank fraud has crossed ₹71,500 crore with 6800 cases of fraud apart from lakhs of crore non-performing assets (NPAs) and write-offs (Manikandan, 2019). At present, the total NPA of India’s public sector banks has crossed ₹9.3 lakh crore amid rising stressed assets. NPAs and bad debt must be considered as a modern legal corporate crime. Infrastructure Leasing & Financial Services Limited, Humana Dental Insurance Company, Gitanjali Group, Religare, Hindustan Power, Bhusan Steel, Manpasand Beverages, PNB, Vijay Malaya, Mahul Choski and Nirav Modi have been accused of multiple charges ranging from fraudulently diverting, misappropriating, fudging accounts, making dummy companies for fraudulent purposes and siphoning off funds of approximately ₹130 lakh crore. Alslo, this is just the tip of the iceberg. However, sadly, servile academia and corporate media have almost joined the State–corporate nexus to give a clean chit to this ‘legal’ plunder of public exchequer money. It must be noted that these fraudulent activities are largely executed by promoters of the companies in collaboration with institutional investors, whereas scattered public shareholders are bearing the brunt of these heinous corporate crimes through daylight loots of public resources.

The alleged corporate–politician–bureaucrat nexus implicitly and explicitly kills the very essence of CG and CSR. Thus, it hampers any possible synergy between CG and CSR. It is not strange that even penchant proponents of a neoliberal economic model like Raghuram Rajan and Zingales Luigi had to openly criticize the parasitic rate of exploitation, having no concerns for the people and the environment. Rajan and Luigi (2003), in their book Saving Capitalism from Capitalists, have cautioned against the insatiable greed of capitalists who have endangered the very existence of the capitalist model that needs to be reined in.

Therefore, market morality and ethical values stand seriously liquidated. Even in these unambiguous cases, instead of setting a good example through exemplary punishment, monopoly capitalists are offered out-of-court settlements after they are found guilty. This has, in general, boosted the confidence of habitual offenders that they could get scot-free even in clear-cut cases. The newly passed Insolvency Bankruptcy Code (IBC, 2016; Ministry of Law and Justice, 2016) provides mysterious benefits to large dominant corporations. IBC is the classic case of legal loot. Synergies-Dooray Automobile Ltd. was sold for a paltry ₹54 crore, despite having outstanding debt worth ₹972 crore. Reliance Communication (RCom) of Anil Ambani is controlled by Reliance Group. RCom has filed for bankruptcy following the rise of its debt to ₹47,000. It would most probably be bought by either of the two monopoly giants, Reliance Jio of Mukesh Ambani or Bharti Airtel, by offering the lowest biddings. Reliance Jio has emerged as a monopolistic telecom operator by using predatory tactics by offering free internet services to the public at its launch, essentially to throw out small private players along with public sector telecom giant Bharat Sanchar Nigam Limited (BSNL). Ethically and morally, the losses and liabilities of RCom should have been recovered from other portfolio investments held by the promotors of Reliance Group to send a stern warning to the prospective corporate offenders. However, on the contrary, monopoly capital has invented a new tool of diversified conglomerate through easy entry and exit to dupe tolling masses in addition to the Insolvency and Banking Code (IBC) like freebies. In sum, IBC is nothing but a legal weapon to make merry for monopoly capital by duping workers and the public exchequer, who will lose jobs and public shareholders, respectively, whose money will be engulfed by corporates. This brings the role of CG and regulatory institutions into question. It also raises serious and genuine suspicion over the potential synergy between CG and CSR.

CSR Trends in India

The general trend in Indian CSR experience is to reduce CSR narrowly in terms of spending a lump sum portion of its net profit on activities listed in the Companies Act, 2013, including education, health, environment, rural development, and so on, whereas CSR is a broader concept that must be defined as how corporations imbibe and reflect upon ethical and moral values of social justice while performing their main functions of production, distribution and exchange in day-to-day life (Kumar, 2016). In a nutshell, just means must be used to achieve ends. The purported aim of these seems to be benevolent activities, which differ from company to company, depending on their relative sizes, market penetrations and profitability, among many others. Some regard CSR as a burden on companies, which kills the essence of competitiveness of a free market economy. Friedman subscribed to this idea. Some regard it as an integral part of corporate strategy to build brand equity. Some think that CSR stems from the ethical values and moral philosophy of corporations. On the contrary, critical theorists and Marxist ideologues regard it as a diversion tactic to divert the attention from the systematic vices companies commit and support the parasitic and exploitative neo-imperialist system.

There is another dominant trend, which is the ‘NGOisation’ of CSR activities. In this, CSR activities are carried out by NGOs and most probably by NGOs floated by concerned companies themselves making them eligible for tax exemptions and other ancillary benefits. NGOisation is a conscious project invented and promoted by monopoly corporations and governments to essentially diffuse the resistance movements against corporate exploitation. Petras (1997) argued that NGOs are used by neoliberal ruling classes to ‘de-politicise and de-radicalise’ social movements stemming from the discontentment of these neoliberal policies. Tens of thousands of tribal people who are fighting for their ‘Jal Jangal aur Zameen’ have been wiped out, and lakhs have been displaced in the name of the so-called development by confiscating tribal land and rich natural resources underneath it by grossly violating the Forest Rights Act, 2005.

Neoliberal policies in India have intensified ‘the process of accumulation by dispossession’ (Harvey, 2005) and expropriation executed by the unholy alliance of ‘state-corporate-neo-feudal’ forces. According to government’s admission, more than 15.5 million people have been displaced by the so-called developmental projects, of which 75% still await rehabilitation, apart from hundreds murdered and inhumanely tortured. Monopoly corporations and their NGOs have cheated people, particularly Scheduled Tribes (STs) in the tribal areas ‘in the name of CSR or Resettlement & Rehabilitation’ (Kapoor, 2013). Vedanta, Pohang Iron and Steel Company in Orissa, Tata in Singur, West Bengal and Reliance in Raigad, Maharashtra, have been accused of violating all rules available in the books to exploit and expropriate natural resources and illegally grab land, more often through violent means where ‘the state acts as corporate agent’ (Shiva et al. 2011). These corporate entities have been very active in CSR activities, although a major chunk of CSR spending is spent on arresting the social movement opposing their exploitative projects (Kapoor, 2013; Shiva et al., 2011).

CSR activities, particularly those in direct government control, are also making headlines but not all for good reasons. The provisions of the newly enacted Companies Act are being blatantly violated with regard to CSR spending. Sundar (2018) critically traced the emerging trends of misuse of CSR funds at the behest of the Central Government. It diverted CSR funds from areas broadly covered by the newly enacted Companies Act. Cash-strapped PSUs were arm-twisted by the Government of India to allocate funds for the construction of the Statue of Unity in Gujarat, which does not conform to the general activities listed in the Companies Act. These violations by the Central Government to settle their personal political scores do not go well with either good CG practices or the agenda of promoting CSR activities (Pal, 2018). Such practices will fail to take the benefits of synergy emerging out of CG and CSR. As good CG is considered as an inseparable part of CSR of corporations, it demands the immediate attention of the government, corporations and all relevant stakeholders to work in tandem to rectify these discrepancies so that CSR could be taken up in their true sense.

CG and CSR: Unaccountable Tyranny

Apart from the above-mentioned naked corporate malfeasance, corporations have been launching virulent attacks against the environment, workers, consumers, PSUs and toiling masses in lust for quick profit. From so-called liberal to extreme right-wing influenced neo-liberal economic policies pose imminent danger to the so-called Sustainable Development. The respective Indian governments backed by parasitic neo-imperialist forces (IMF, World Bank and WTO) have unleashed an unprecedented attack on workers and natural resources of tribals and the broader toiling masses through relentless privatisation of natural resources and the public sector along with huge tax concessions to corporations, instead of increasing the purchasing power capacity of the toiling masses. Air India, BSNL and Mahanagar Telephone Nigam Limited are on the verge of extinction as the government is contemplating the sale of even strategically important sectors like defence, railways and energy sectors amid huge protests by respective trade unions. The banking sector is also facing a head-on crisis due to pro-corporate loan policy. When the country is facing an all-time high unemployment rate in the last forty-five years, the Government of India has been privatising even profitable and job-generating PSUs.

This predatory nature of business has created a deep trust deficit. Despite this, the government does not seem to address all these problems; instead, it ceaselessly follows exploitative and aggressive pro-big corporate policies that resort to any means to make supernormal profits. In fact, the government explicitly sides with the exploitative and oppressive corporate class in the event of confrontation between corporates and workers, environmental activists and other resisting stakeholders. The man-made Bhopal Gas Massacre still haunts public imagination where the owner of American company Union Carbide got scot-free, which caused more than 10,000 deaths and maimed half a million, rendering permanent health disorders.

Another classical case of ruthless corporate violence is a pro-environment anti-Sterilite protest where thirteen people were murdered by government’s sniper shooters and a hundred were grievously injured, leading to shutdown of the ecologically destructive Vedanta plant by the government under historic resistance from local Tamilians. Reacting to the Tuticorin massacre, the environmental activist Pillai (2018) revealed how violently the Indian State deals with its citizens who actively resist ecologically destructive industrial projects. She said that ‘murder is only the most extreme of tactics used to silence land and environmental defenders. Death threats, arbitrary arrests, sexual assault are quite common’. More than 7,000 villagers were slapped with sedition charges for opposing the environmentally and socially destructive Kudankulam nuclear project.

Taken together, all trends, in totality, present a very grim objective reality. It is a clear travesty of the principles of the so-called free market economy. It is an undeniable truth that if a business has to grow sustainably while strengthening stakeholders’ democracy in India, then it is essential that corporates and government adopt socially acceptable, socially responsible and ethical business practices through well-placed sophisticated CG and CSR paraphernalia. Effective and responsive corporate governance machinery coupled with ethical and socially responsible business is a sine qua non as the vocal proponent from Chicago School of Neoliberalism and former RBI Governor, Raghu Ram Rajan, in his new book The Third Pillar: How Markets and State Leave the Community Behind exasperatingly contended that both market and State have invaded the very nodal points which were supposed to strengthen the community’s wellbeing (Rajan, 2019). He warned that such a trend is very ‘dangerous’ to ensuring possible equilibrium among the market, State and community. There is no shortcut to address these structural crises emanating from the exploitative pro-promoters and pro-management capitalist structures. Neither must it be assumed nor expected that one fine day, the corporate–State nexus will cease to exist. It can only be made to mend its way when all the exploited and affected stakeholders come together on a continuous basis to resist such onslaughts. Only people’s collective and united struggle of concerned stakeholders can hold the ‘unaccountable tyranny’ accountable.

Conclusion and Suggestions

This article has argued that there exists considerable friction between CG and CSR in India (under the neoliberal framework), which is largely untapped owing to a large number of factors such as anti-competition unfair trade practices, lack of independent regulatory mechanism, monopolistic and predatory nature of big businesses, agency problems, lack of independent accounting and audit committees, absence of effective grievance redressal mechanisms, lack of whistle blower mechanisms, absence of Citizens’ Charter, voluntary disclosure of information, information asymmetry and the role of media. To ensure an accountable and responsible corporate environment, it is extremely important to timely address these pertinent issues of neoliberal economies, of which India is an integral part.

Stakeholders’ activism can play an important role in addressing the genuine concerns mentioned in this article. If such a stakeholders’ approach has to yield results, then it has to be promoted under the active leadership of employees and different pressure groups where minority shareholders’ rights are protected and independent and objective accounting and audit and social audit are made integral parts to infuse confidence among stakeholders. Accurate and timely disclosure of information, along with the independence of the board of directors, should become part of good corporate governance practices. The stakeholders’ approach has in general become synonymous with the shareholders’ approach because promoters and institutional investors dominate in the prevalent stakeholders’ approach. This is a structural problem that is not going to be affected by any kind of lucrative recommendations. To hold corporations socially and economically accountable and responsible, restructuring the economy is indispensable. Restructuring the economy is a political question. It requires an uncompromising people’s movement, which will help to build socially and economically responsible and accountable corporate governance structures.