Fri, Dec 31, 2010 - Page 5 News List

FEATURE: New rich in India prove reluctant philanthropists


A huge charity gift by a high-tech tycoon has shone a harsh light on the philanthropic track record of India’s billionaires.

Azim Premji, who transformed a family-owned cooking oil firm into the software giant Wipro, announced earlier this month that he was giving US$2 billion to fund rural education.

The 100 wealthiest Indians have a net worth equal to 25 percent of India’s GDP and Premji’s donation was seen as a challenge to others in the ultra-rich club.

While charitable giving by the wealthy is widespread in countries like the US, it is far less established in developing nations such as India and China.

Arpan Sheth, author of an overview of philanthropy in India by global consultancy Bain, says the charitable potential of the world’s second-fastest-growing major economy is huge.

“Should individuals [in India], particularly the well off, be giving more? And can they afford to make more and larger donations? The answer to both questions is, ‘Absolutely yes,’” Sheth said.

However, philanthropic activity has failed to keep pace, partly, Sheth believes, because the rapid accumulation of individual wealth is a still a relatively new phenomenon.

“We have a history of scarcity and so it takes a while to build confidence that the future will be better on a sustainable basis and let go of newly earned wealth,” Sheth said.

There is also a suspicion that charitable networks in India are not professionally managed and so donors fear their contributions “won’t be put to good use or are at risk of being misappropriated,” Seth said.

The Bain report noted that it normally takes 50 to 100 years for a culture of philanthropy to emerge, and Sheth stressed that charitable giving in India had yet to attain the same social cachet it attracts elsewhere.

Open displays of wealth are often more admired than criticized in India, where the rich commonly spend hundreds of thousands of dollars on lavish weddings.

Wipro’s Premji said conspicuous consumption was common in countries climbing the wealth ladder.

“You see it in China, Indonesia, Singapore, Thailand. For the first few years, people want to show visibly they are very rich,” he said.

In India, individuals and companies account for just 10 percent of charity funding, compared with 75 percent in the US.

Traditionally, so-called “old money,” embodied in the likes of India’s 142-year-old Tata Group conglomerate, has focused on promoting the welfare of workers, with healthcare and housing.

Other big Indian business houses gave money for building Hindu temples and other religious causes. Rich individuals also helped in their family villages by building schools and wells.

However, philanthropy expert Deval Sanghavi said there are signs of donors widening their horizons and looking to tackle India’s education, health and other problems on a macro level.

“Initially people thought it necessary to help those closest in their households or villages, but now they realize help needs to be on a wider scale,” he said.

Wealthy individuals now are “getting involved in charity and wanting to change the country,” he said.

This story has been viewed 1682 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top