India’s rich should emulate Gates, Buffett

As Arpan Sheth, a Mumbai-based partner with Bain, pointed out at the Indian Philanthropy Forum last March, the culture of charity is yet to emerge in India. He cited some basic facts to prove that point. For instance:

    * The share of individual and corporate contributions form only a tenth of all philanthropy; In the United States, they account for a lion’s share, 75 per cent.
* In India, the wealthiest class gives away just 1.6 per cent of household income, less than even the middle class, which donates 1.9 per cent.

Follow us

Sheth identified many reasons why India’s rich are unwilling to donate money to charities, including a lack of government tax credits, cultural factors and the relative unwillingness on the part of the new rich to give away large chunks of money to philanthropic causes.

However, few societies need philanthropy more than India. A country of unimaginable riches, it has also unthinkable destitution. For starters, India has the largest concentration of poor people in the world. A majority of the population cannot afford good health care or quality education. A third of the country is not literate.

If there is one defining feature of contemporary India, it is inequality. Deprivation coexists with sinful plenty across the length and breadth of the land. Nothing illustrates it better than the fact that the country’s wealthiest 5 per cent controls two-fifths of its wealth.

Undoubtedly, India has the resources to provide a decent quality of life to all its citizens. It always had. The subcontinent has been a land of infinite riches through the ages. It was the fairy-tale opulence of the region that brought invaders, settlers and merchants of all ilk — the Aryans, Alexander, the Arabs, the Mongols, the Mughals and the British—to its shores over the millenniums.

Even though the European colonial rule wrecked its economy and drained much of the resources, when India became an independent nation in the middle of the last century, it still possessed unfathomable bounties.

In the late 1930s probably the richest man in the world was the then Nizam of Hyderabad, Osman Ali Khan, who was worth $2 billion, with a daily income of $5,000, as a 1939 Time magazine noted. The year Time ran its cover story, as a matter of fact, the combined receipts of the U.S. treasury was $6.3 billion. (In today’s dollars, Khan’s 1930s’ net worth would be a quarter of a trillion dollars — two and half times more than what Gates was worth at the height of the information technology boom — which would make the Nizam one of the richest individuals in history.)

Now two decades after India launched market reforms, the country has once again become the land of the supremely affluent individuals.

In the Forbes magazine’s latest list of the world’s billionaires, 55 are Indians. Their combined net worth: close to $250 billion, or nearly 20 per cent of the country’s GDP. India accounts for just a little over 2 per cent of the global GDP, but it is home to 5 per cent of all billionaires in the world.

Those who figured on Forbes’ list include household names such as Lakshmi Mittal ($31.1 billion), Mukesh Ambani ($27 billion), Azim Premji, ($16.8 billion), N.R. Narayana Murthy ($2 billion) and Vijay Mallya ($1.4 billion). They represent a whole gamut of India’s economy, covering nearly all major sectors — information technology, infrastructure, telecom, banking and finance, steel, real estate and healthcare, to name a few.