The 21st century is rightly spoken of as the Asian century. Economic growth in Asia in the last decade has positioned the region as the growth engine of the world. At a time when industrialised countries’ growth has greatly slowed down, GDP of Asian countries is estimated to grow by 6.9 per cent in 2012 and 7.3 per cent in 2013. The Asian region is, thus, expected to play a very crucial role in driving and stabilising global recovery process.
This is part of a longer term recovery of the position Asia had 250 years ago. If everything goes right, Asia’s share in the world economy could be greater than half by the year 2050, as against the present level of about 27 per cent. The dramatic modernisation of the Asian economies is acknowledged as one of the most important developments in the economic history of the world.
Asia’s corporate sector deserves a great deal of the credit for this massive transformation of Asia. It faces many challenges in the years ahead. We need modern, efficient and innovative companies, capable of competing with the best in the world and living up to the highest standards of corporate governance. As Asian governments, we in the government have the responsibility to ensure that corporate laws match up to international standards, that the regulation of our stock bourses comes up to the expectations of global investors and that our banking and financial sectors are exemplars of both efficiency and stability. We must build a climate that attracts investment and encourages and rewards innovation, and establish fair and effective regulatory institutions and also legal processes. Above all, we have the responsibility to ensure probity, transparency and accountability in processes of governance. The last century which has left behind a bitter legacy of the consequences of strife and conflict has also taught us about the immense benefits that could be gained from peace and from cooperation between countries. India was fortunate to have the guidance of Mahatma Gandhi who gave us the concept of Satyagraha to overcome formidable political opponents in pursuit of our Independence. His prescription of a just society based on commitment to truth and his concept of trusteeship of the nation’s wealth have guided us as India’s democracy, economy and society have evolved over the years.
Jawaharlal Nehru, India’s first Prime Minister was the architect of modern India who spoke of the factories and dams as the new temples of secular India. He had a clear vision of the need to transform a rural and agricultural economy to a rapidly expanding modern economy, with an impressive manufacturing base. Since then we have seen new areas of transformation in modern services and a growing urban profile of our country.
As efforts are made the world over to redesign and reengineer business corporations to make them compatible with the aspirations of modern democratic societies, India can benefit from looking to its own traditions in several important respects.
Corporate governance including responsible conduct towards all the stakeholders, within the corporation as well as outside is also seen as good economics besides desired moral behaviour. Corporate Social Responsibility (CSR) is, therefore, increasingly being seen as a fundamental dimension of the Social Contract between human beings and therefore sought to be subject to public disclosure and scrutiny. The contours and foot print of CSR are widely debated but there is today a growing consensus that it is intrinsically linked with the concept of sustainable development. A seamless structure is thus emerging that combines elements such as best practices in business, sustainable and equitable development strategies, as also redistribution of incomes and proper regulation of markets. The evolving economic space has to be addressed by all organs of the government: the executive, legislature and the judiciary. Separation of powers has been the classical guarantee of constitutional government and the rule of law. The balance between the three organs may appear to get unsettled at times but ultimately it has stood the test of time. Whilst Parliament has endeavoured to give expression to the aspirations of the people, the higher judiciary in India has made the most remarkable innovations in the field of public law using instruments like Judicial Review of Administrative action and Public Interest or Social Action Litigation to both enforce constitutional mandates as well as to amplify the Constitution’s philosophy in a meaningful manner. But as the judges have themselves stated, in contemporary times conventional common law wisdom and the doctrine of stare decisis need to be fortified with knowledge of modern challenges and the response of applied sciences, including economics, as the Honourable Chief Justice of India just mentioned.
The ability for economic analysis of law is now as much of an imperative as familiarity with Information Technology and the world of computers. Certain schools of jurisprudence have for long been rooted in economic analysis and have seen the pattern of rights and duties primarily in those terms. There are other schools of thought as well including some rooted in ancient Indian traditions. But as recent judgements have shown the adjudication of rights and claims between parties including between State actors and non-State parties has wide implications for the economy and can no longer be viewed in isolation. Judicial decisions may at times have transnational impact since the global financial and trade systems are also becoming closely integrated. Therefore, Judges of the 21st century therefore have to be social scientists, economists, political thinkers and philosophers. In response to transformational changes of this century, we are examining many of our commercial and corporate laws to make them relevant to the challenges that lie ahead, particularly for ensuring distributive equities and empowerment of the marginalised sections of our society. Increasing use of this word ‘inclusive’ is indication of this new emphasis on equity in economic and social processes. New laws in areas such as regulation of securities market, competition and limited liability partnerships have been put in place. We will soon bring before Parliament the new Companies Bill that has been in the making for quite some time now.
Excerpts from PM Manmohan Singh’s address at the Conference on Economic Growth in Asia and Changes of Corporate Environment in New Delhi on September 22