Guru Mantra M. Kanchan
Senior Researcher, Center for Leadership, Innovation and Change Four and a half decades later the situation was reversed. Economy worsened so dramatically that India could no longer support itself with its closed door policy and had to temporarily pledge its gold reserves with Britain. This drew enormous amount of flak and the country saw no solution other than heed to the IMF’s suggestion and open its doors to the world. This took the name of Structural Adjustment Program (SAP) commonly known as liberalization. The licensed regime
ISB, Hyderabad
Revised Clause 49: Is it India’s Answer to Corporate Governance?
INTRODUCTION The buzz word in the corporate circles since a decade is the term ‘corporate governance’ which has made many a corporation hold their breath to comply their rules. One of the fast reaching reactive legislations in the history of the corporate world is Sarbanes-Oxley Act (SOX) of 2002 which affects not only the American companies but any company which wishes to be listed in the US of A. It has been the answer to many financial debacles in the big corporate houses which swallowed the savings and wealth of the common man. As politicians, market analysts, forensic accountants and many others raked over the corporate ashes, the call to regulate companies better grew louder. NEED FOR CORPORATE GOVERNANCE IN INDIA: The collapse of the former Soviet Union, the emergence of China as a super power, the Asian financial crisis which hit Japan the most, all in one way brought to the forefront that good governance is of paramount importance. The need to have better governed corporations took a greater stand in developing nations due to the emergence of marketoriented global economies. India after independence had a mammoth task of industrializing its economy. Nehru’s penchant with the Russian model of socialism resulted in the Five-Year Plans. Capital intensive public sector units were set up for essential goods and services keeping in mind the socialistic pattern of society. They were set in the backward areas more to achieve all round economic development and to fulfill social obligations and generating employment opportunities. The private sector was allowed in select areas only. Not much thought was given to profitability since they were under the protective umbrella of government subsidies. The licensing regime effectively cut out competition thus further encouraging complacency in organizations. The only thought in the mind of corporations was to maximize the return to the shareholder owner.
was dismantled and the world was invited to set up shop for the manufacture of products and services. With the introduction of SAP and the emergence of borderless economy, foreign investments poured in. Simultaneously a call went up to administer the corporations as it was acceptable globally. India with its dire need for capital could no longer be a producers’ market and consumer once more became the King. The world woke up to financial scams onl ????????????????????????????????????????????????????????????????????????????%???????????????????????????????????????????U???????????????????]???
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