“Now comes this new fad of corporate governance. It is not enough for us to make profit; it must be made in a way that is acceptable to the West. So we are rushing once again into making fools of ourselves. Irrespective of the costs involved, everyone is talking of audit committees of the board and additional disclosures. Soon, issue of compliance certificates will become a racket. What will we gain out of it? You can either govern or be open. On top of a massive recession since 1997 which has taken away our profit, now comes this added cost. How unfair can you get?”

This is the reaction of a middle manager of a very large company, well-known for its progressive policies. In the same vein, there were these utterances of Rahul Kumar Bajaj (the chairman of Bajaj Auto and the ex-president of the Confederation of Indian Industry) at a seminar on corporate governance in 1996. He said it was common knowledge that managers and directors of Indian businesses engaged in questionable practices while being fully aware of what were ideal or desirable practices. Therefore no committee on corporate governance was necessary.

Both these views are cynical but fairly representative responses to a development which, in the perception of a large number of business people, is being thrust upon them by developed countries or foreign capital. This antagonistic reaction looks at corporate governance measures as a cost of globalization and not as a necessary reform for the development of capital market.

At the same time, two points in the views expressed above need to be acknowledged as valid.