India Inc can be lab for political governance: Khurshid

Corporate Affairs Minister Salman Khurshid today said India Inc, with its good corporate governance norms in place, can become a laboratory for good political governance in the country.

"Corporate governance can be a laboratory for good political governance in India," Khurshid said at CII's conference on corporate social responsibility (CSR).

Khurshid's comments come in the backdrop of concerns over corporate governance in the country that were accentuated after last year's Satyam fraud came to light.

In December, the ministry had released two set of guidelines on corporate governance and CSR. These norms seek to enhance accountability and responsibility of Indian companies, through voluntary uptake by businesses.

Earlier this month, a ministry official indicated that the government will try to harmonise voluntary corporate governance norms with the proposed new Companies Act and that was open to making the existing guidelines more effective.

"We are open to re-doing and re-evaluating the voluntary corporate governance code next year... We will (also) try to harmonise the code with the new Companies Act and other related law," Corporate Affairs Secretary R Bandyopadhyay had said.

He had said the ministry is doing a follow—up of how much companies are complying with the voluntary guidelines introduced in December last year.

The code was drawn based on recommendations of the Naresh Chandra Committee, which was formed to make suggestions to the government on a variety of corporate governance issues, including the roles and responsibilities of independent directors, auditors, regulatory agencies, institutional investors and the media.

The ministry is studying the possibility of modifying the proposed Companies Bill 2009 to include these guidelines.

The guidelines contain proposals like changing audit partners by companies every three years, a fixed remuneration for directors, limit on the number of independent directors on boards and separation of the office of chairman and managing director.

On CSR, Khurshid said that while the government does not want to be 'moral police', companies should try to really perform on their governance as well as  social responsibility.

"The government does not want to be like moral policeman, and business must try to convert CSR from a philosophy to real deliverables," he said.

The minister said that as far as CSR is concerned, the government can just be a catalyst to the whole exercise.

"When inspiration and initiatives do not result in improvement, the role of instructions from the government is inevitable," Khurshid said.

Calling for making economic development sustainable, he said that it could be done only when CSR becomes internal to businesses.