Purpose of any biz can't be only profit: Mukesh

Amid the debate over making it mandatory for companies to spend at least 2% of profits on Corporate Social Responsibility (CSR) activities, Reliance Industries (RIL) Chairman and India's wealthiest person Mukesh Ambani today suggested improving CSR to Continuous Social Business.

"The purpose of any business cannot be only profit. Profit for the shareholders is important. But unless entrepreneurs have a larger purpose and businesses that change lives of millions of people, a sustainable business cannot be created," he said at Ficci's Annual General Meeting here.

"We will have to move from a model of CSR to a model of Continuous Social Business through enterprise and entrepreneurship," he said. "For that, we will have to create world class institutions with a soul."

"It is important to get the business of businesses right," he said, adding that the primary responsibility of business is social improvement.

The Parliamentary Standing Committee on Finance has proposed that companies should spend at least 2% of their annual profits on CSR activities, but the industry has opposed the proposal.

Calling for increased spends from the government in healthcare and education, Ambani said that outlays in healthcare formed only 1% of India's GDP, which he said needs to grow at least fivefold.

"Our demographic dividend, the youth and the young, are largely unprotected and uncared for. We will need to radically transform healthcare delivery to all our people," he said.

"Current food prices justify heavy investment and job creation has to be through agriculture and rural economic growth," Ambani said. He foresees an additional $500 billion opportunity for India in agriculture output.

The opportunity in Indian agriculture is as big as it is in energy, he said, adding that the country needs more policies like the liberalisation policy of 1991.

Stating that a large untapped opportunity existed for India to boost its under-leveraged consumer class, Ambani said the country's per capita income is less than $1,000, one-third of China, while its per capita energy consumption is minuscule.

"Less than 1% of our population uses credit cards for transactions and consumer loans are about 10% of the total loan disbursals, representing an under-leveraged consumer class," Ambani said.

He said that India has grossly under-performed both in expanding access and improving the quality of education.

"In a fast moving world, we have not managed to make our education system contemporary," he said.

On agriculture, Ambani said that the sector is still languishing in the low end of the agronomy value chain.

"It is a victim of the low-investment, low-yield, inefficient water use and shocking levels of waste of farm produce. This situation must change," he said, adding "Indian agriculture will require the use of modern farming methods and plant biotechnology. It will require new water-saving micro-irrigation practices".

On manufacturing sector, Ambani said that Indian manufacturing industry has to carefully target the export markets.

"It needs to focus on scale, technology and customer needs. It needs to improve efficiency across the supply chain," he said.

He called Indian businesses to get more involved in rural India. "They need to understand the nuances and the challenges of rural India," he added.

Ambani said that India’s economy has crossed $1.3 trillion, a fourfold growth in 20 years.

"The next 40 years could see even more explosive growth. Several estimates are projecting that our GDP would range between $30 trillion and $40 trillion by 2050," he said adding "In the coming years, India would become the fastest growing economy in the world."