Abstract:

The case discusses the corporate philanthropy initiatives of Switzerland based pharma major Novartis AG. Even before Novartis was incorporated in 1996, through the merger of Ciba Geigy and Sandoz; Ciba Geigy was actively involved in philanthropic activities and had set up a foundation in 1979, which went on to become Novartis Foundation after the merger. Novartis also adopted the UN Global Compact principles in the year 2000. Novartis and Novartis Foundation were actively involved in several philanthropic projects to help the poor in underdeveloped countries. The case discusses in detail few such projects like anti-leprosy program, initiatives to eliminate malaria and tuberculosis (TB), and programs for AIDS orphans etc.

The company also started a research institute to carryout research on tropical diseases. The institute was actively involved in finding cure for dengue fever and TB. The philanthropic activities of Novartis were extended to include poor people of the developed countries, and the company started providing its highly effective cancer drug Gleevec in the US free of cost for patients whose income was low.Issues:

Study and analyze the importance of philanthropy initiatives by organizations Determine the rationale for corporate philanthropic activities and how to make them sustainable Evaluate how corporates can play their part in the development of the society Understand the principles of the UN Global Compact and its implementation by NovartisKeywords:

Novartis AG, Novartis Foundation for Sustainable Development, Corporate Philanthropy, Social Responsibility , Sustainability Management, UN Global Compact, Access to Medicines Program, Novartis Code of Conduct, Social Marketing, Corporate Citizenship One vital way of improving health conditions for poor people of the world is to establish strong partnerships involving all parties - governments, NGOs, the private sector and international organizations. The cooperation between The World Health Organization (WHO), the Novartis Foundation for Sustainable Development (NFSD) and Novartis to eliminate leprosy exemplifies this form of partnership."1 - Paul Hunt, UN Special Rapporteur on the Right to Health, in 2004. "We are committed to applying our core strengths in discovering, developing, producing and distributing high quality medicines to ensure that patients around the world receive the treatments they need."2 - Dr. Daniel Vasella, Chairman and CEO, Novartis, in 2005.Introduction

In December 2005, Switzerland-based pharmaceutical giant Novartis AG (Novartis) received the 'Business Ethics Award 2006' by German Business Ethics Network, for implementing the principles of the Global Compact across the company (Refer Exhibit I for The Principles of the Global Compact). The award recognized the activities of the Novartis Foundation for Sustainable Development (Novartis Foundation), which provided a link between the company and society, by bringing out issues pertaining to development policies and bringing external views to the attention of Novartis. In February 2005, Novartis AG received the '2005 Excellence in Corporate Philanthropy award.' The award was given by the Committee to Encourage Corporate Philanthropy (CECP) in recognition of Novartis' efforts that benefited millions of poor patients across the world. CECP gave the award to companies that had demonstrated executive commitment and innovation in corporate philanthropy. In the year 2004, Novartis spent over US$ 570 million on philanthropic activities through a program called 'Access to Medicines'. Through this program, the company reached more than 4.25 million poor patients across the world offering them subsidized medicines. By 2005, around 6.5 million patients around the world benefited from the programs of the company that were valued at US$ 696 million. The company's philanthropic activities included drug donations and research & development activities to fight against diseases like leprosy, tuberculosis (TB), and malaria in the developing countries. Novartis also carried out patient assistance programs to reach poor patients in underdeveloped and developing countries (Refer Exhibit II for the details of 'Access to Medicine' program).Introduction Contd,..

The Novartis Foundation, in association with international partners like the World Health Organization3 (WHO), the United Nations4 (UN) and developmental institutions, worked toward promoting economic, cultural, and social human rights in developing countries. The Foundation also worked to reduce health and poverty-related problems of the Third World. Another main task of the Novartis Foundation was to serve as a bridge between Novartis and the community consisting of developmental institutions, non-governmental organizations (NGOs), the private sector, and government institutions.

In a scenario where there was a growing demand for corporates to play a proactive role in dealing with the problems of society, the Novartis Foundation was playing its part in dealing with poverty and disease in Third World countries and was guided by a clear vision to do so (Refer Exhibit III for Vision, Mission, and Objectives of the Novartis Foundation).

According to Dr. Kalus M. Leisinger (Leisinger), who had been President and CEO of the Novartis Foundation since the year 2002, "For many years we have had our leprosy program, we now have our malaria program, we have our tuberculosis donation, and we offer our employees throughout the developing world free diagnosis and treatment for HIV/AIDS, TB, and malaria. In addition, we have founded a new research institute in Singapore that exclusively carries out "pro bono"research on a non-profit making basis, such as for tuberculosis and dengue fever. I am very proud of this and I think we have given a clear signal with our initiatives."5Background Note

Novartis was the result of a merger between Ciba-Geigy and Sandoz in 1996. The origins of Geigy could be traced back to 1758, when Johann Rudolf Geigy-Gemuseus started a company that traded in materials, chemicals, dyes, and drugs in Basel, Switzerland...About Novartis Foundation

The origin of the Novartis Foundation can be traced back to the year 1979. At that time, it was known as the Ciba-Geigy Foundation for Cooperation with Developing Countries (Ciba-Geigy Foundation). The Foundation was formed to help Third World countries fight against health and poverty related problems. It was particularly active in the areas of leprosy and TB. After the formation of Novartis, the Foundation was renamed as the Novartis Foundation for Sustainable Development. The Novartis Foundation acted as a link between the company and the community. It communicated the happenings in the external world to the management of Novartis.

Novartis Corporate Citizenship Initiative

The UN secretary general, Kofi Annan, proposed the Global Compact in an address to the World Economic Forum in 1999. The Global Compact had nine principles drawn from the Universal Declaration of Human Rights 1948 , the International Labour Office (ILO) Declaration on Fundamental Principles of Rights at Work, 1988 , and the Rio Principles on Environment and Development, 1992...

Tackling Leprosy

The WHO had recommended Multidrug Therapy (MDT) to treat leprosy . Two of the drugs used in MDT, clofazimine and rifampicin were developed by Novartis. Since the year 1995, Novartis had been providing MDT for leprosy patients and was one of the two suppliers providing leprosy drugs to the WHO. From 1998, MDT was sourced exclusively from Novartis. In 1999, the Global Alliance for Elimination of Leprosy was formed at the initiative of the WHO. The members in the alliance were the WHO, leprosy endemic countries , the International Federation of Anti Leprosy Associations, the Nippon/Sasakawa Memorial Health Foundation, and Novartis...Fighting Against Tuberculosis

According to WHO estimates, as of 2004, TB killed around two million people every year across the world. Around eight million people developed TB every year. In 1993, the WHO declared TB as a global emergency...Roll Back Malaria Initiative

Malaria affects poor people and children in many African and Asian countries. Every year, at least one million children die due to malaria in this region. As most of the sufferers were poor people from underdeveloped countries, global pharma companies did not pay much attention to research on drugs against malaria. The total expenditure on malaria related R&D was around US$323 million in 2004. The incidence of malaria increased from the 1980s mainly due to the increased resistance to drugs that had earlier been effective...

AIDS Orphans

Another area where the Novartis Foundation undertook substantial work was in the cause related to AIDS orphans. These children required emotional and social support apart from

medical support. Children with AIDS were treated as outcasts by society, especially in the African and Asian countries...Novartis Institute For Tropical Diseases

Tropical diseases were often not given enough importance by pharmaceutical companies. Only 1% of the 1,400 new drugs introduced between 1975 and 1999 were meant for tropical diseases. In order to address this problem, Novartis established a research institute, the Novartis Institute for Tropical Diseases (NITD) in Singapore in 2002...

Other Innovative Initiatives

Novartis had introduced a drug named Gleevec in the US (known as Glivec in other countries). It was used to treat specific forms of leukemia and some gastrointestinal tumors. The drug was highly effective and it was proved that it reduced the number of cancerous white blood cells...The Benefits and Challenges

The Global Compact became the important component of sustainable corporate development and its implementation at Novartis... By the end of your reading, you should be able to answer the following questions: 1. What do you understand by the term Corporate Social Responsibility (CSR)? 2. Explain two actions that Amway and its IBOs are currently taking that involve CSR. 3. Analyse the key ingredients in Amways CSR strategy. Show how the strategy is designed to translate the vision into practical steps on the ground. 4. Recommend ways in which Amway could enhance and develop its impact on making every child matter.Introduction

Corporate Social Responsibility (CSR) means businesses and organisations working responsibly and contributing positively to the communities they operate in. It involves working with employees, their families, the local community and society at large to improve their quality of life. Companies that operate in a socially responsible way strengthen their reputations. In business, reputation is everything. It determines the extent to which customers want to buy from you, partners are willing to work with you and your standing in the community.The company

Amway is one of the worlds largest direct sales organisations with over 3 million Independent Business Owners (IBOs) in over 80 markets and territories worldwide. It is a family-owned business with a strong emphasis on family values. Its IBOs are often couples. Many of these are raising families. They therefore have a strong bond with children. These families are more than happy to partner with Amway, who, as part of its Corporate Social Responsibility strategy, works with UNICEF, the United Nations Childrens Fund. As a family company, Amway is committed to playing a part in improving the lives of children in need across the globe. In this way, the company is able to show its commitment to the support of global causes. Amway defines a global cause as a social issue affecting many people around the world engaged in a struggle or plight that warrants a charitable response. This case study shows how Amway is a business that does more than provide customers with good quality products. It shows the practical realities of Amways global commitment and how it plays a key role in the communities in which it operates.Growth and responsibility

An understanding of how Amway operates as an organisation gives a clearer picture of the contribution it can make to help children in need across the globe. Amways vision is to help people live better lives. It does this every day by providing a low-cost low-risk business opportunity based on selling quality products.What does Amway do?

Amway distributes a range of branded products. These products are sold to IBOs worldwide. The IBOs are Amways links with consumers and the communities in which they operate. The IBOs are self-employed and are highly motivated. They work within the guidelines of Amways Rules of Conduct and Code of Ethics, which are about being honest and responsible in trading. IBOs sell to people that they know or meet. They can introduce others to the Amway business. Typical products that IBOs sell include:

personal care fragrances, body care skin care and cosmetics durables such as cookware and water treatment systems nutrition and wellness products such as food supplements, food and drinks.

IBOs play a key part in helping Amway to deliver its Global Cause Programme.Amway programmes

In order to give many of the worlds children a chance to live a better life, Amway launched the global One by One campaign for children in 2003. The One by One programme:

helps Amway to bring its vision to life declares what the company stands for builds trust and respect in Amway brands establishes Corporate Social Responsibility at a high level.

Amway encourages staff and IBOs to support its One by One campaign for children. Since 2001, Amway Europe has been an official partner of UNICEF and has been able to contribute over 2 million (about 1.4 million). The focus is on supporting the worldwide Immunisation Plus programme. This involves, for example, providing measles vaccines to children across the globe. The Plus is about using the vehicle of immunisation to deliver other life-saving services for children. It is about making health systems stronger and promoting activities that help communities and families to improve child-care practices. For example the Plus could include providing vitamin A supplements in countries where there is vitamin A deficiency. Since 2001, Amway and its IBOs across Europe have been supporting UNICEFs child survival programme. The need is great. One out of ten children in Kenya does not live to see its fifth birthday, largely through preventable diseases. Malaria is the biggest killer with 93 deaths per day. Only 58% of children under two are fully immunised. The work of the One by One programme is illustrated by a field trip undertaken by Amway IBOs to Kenya. The IBOs travelled to Kilifi in 2006 to meet children and to find out what the problems are in various communities. They act as champions spreading the message throughout their groups. In Kilifi, the focus is on trying to reach the most vulnerable children and pregnant mothers. The aim is to increase immunisation from 40% to 70%. Other elements of the programme involve seeking to prevent the transmission of HIV/AIDS to infants. As the Amway organisation grows and prospers, it is able through CSR actions to help communities to grow and prosper too.Developing a strategy

A strategy is an organisational plan. Implementing a strategy involves putting that plan into action. In other words a strategy shows how a business will achieve its goals. The strategy thus enables an organisation to turn its values into action. Values are what a company stands for. An important value for Amway is being a caring company. Amway believes in demonstrating this caring approach and this is why it has partnered with UNICEF. All Directors design strategies for the whole of an organisation. Effective strategies involve discussion and communication with others. The views of IBOs are influential in

creating strategies for Amway. Amways strategies for corporate social responsibility are cascaded through the organisation as shown below. Amways Global Cause strategy involves creating responsible plans that make a difference. However, the strategy is flexible. In shaping the strategy, research was carried out to find out which global causes IBOs support. The results showed that many favoured a cause that helped children. There was a clear fit between Amways aims to help children and UNICEFs Immunisation Plus programme for children.Objectives

From the outset, Amway set out some clear objectives for its strategy. These were to:

build loyalty and pride among IBOs and employees enhance Amways reputation as a caring organisation make a real difference to human lives.

Child mortality is particularly high in developing countries because of infectious diseases. Many children could still be alive if they had been vaccinated. For under 12 a child can be vaccinated against these diseases and has a fighting chance to reach adulthood. UNICEFs world child Immunisation Plus programme is a fitting focus for the activities of Amway UK and its IBOs. The UK initiative is part of a European-wide fundraising campaign for children. It recognises the importance of building good working relationships with UNICEF in each market in order to launch fundraising programmes through Amways IBOs and their customers. The objective is to raise 500,000 (about 350,000) every year until 2010 across Amway Europe. In 2005 Amway UKs partnership was deepened through becoming an official Corporate Partner of UNICEF UK. The Corporate Partnership is a closer longer-term relationship which benefits both partners. Working together the two parties raise money for UNICEF.Identifying stakeholders

Amways Corporate Social Responsibility strategy has been developed with the interests of the following stakeholders in mind:Communicating the strategy

Good, clear communication is essential in making sure that the CSR strategy relates directly to the company business objectives. Communication also helps in putting the strategy into practice. A number of communications media are used: 1. Face-to-face communication: Regular meetings take place between UNICEF, Amway and its IBOs. Through meetings with UNICEF staff, Amway is able to discuss the vision and objectives. It then passes the message on by meeting with IBOs. In 2005 the two

organisations arranged a joint briefing day for IBO Leaders. They were able to hear firsthand experiences from UNICEF staff about their roles and UNICEFs work as well as where the money goes. 2. Printed material: Amway produces a monthly magazine for all IBOs called Amagram. 3. Public relations materials are also important, particularly at launch events for the initiative (e.g. in Milton Keynes in 2006). 4. Email communication: Email is very important in the company it plays a significant part in keeping IBOs up-to-date. 5. Online activities: There is a micro-site dedicated to the Amway UK/UNICEF partnership on the UNICEF UK website.Fundraising

Amway Europe provides support for fundraising to the extent of 500,000 (about 350,000) per year through selling items such as:

greetings cards multi-cultural gifts and cards stationery and wrapping paper toys for children.

However, Amway UKs support goes well beyond these activities. In addition, it involves staff fundraising events and raffles organised by the IBOs. UNICEF attends IBO major events (usually supported by 1,000 or more IBOs) where requested. A UNICEF stand outlines the work with speakers, literature and merchandise.Conclusion

Amway is a family business with family values. Its IBOs are people who want to make a difference to the communities in which they operate and to the wider world community. This is Corporate Social Responsibility (CSR) in action. The clue to Amways success is the careful planning of its strategy and its involvement with many stakeholders in getting the strategy right. Of course, it is early days in the latest chapter of a strong relationship between Amway and UNICEF. Evaluation is taking place to measure the success of the initiative in terms of meeting fundraising goals. Customer research is carried out to test customers views on the relationship and to find out how aware the general public is about what Amway is doing in the field of CSR.Sample study questions

1. What do you understand by the term Corporate Social Responsibility (CSR)?

2. Explain two actions that Amway and its IBOs are currently taking that involve CSR. 3. Analyse the key ingredients in Amways CSR strategy. Show how the strategy is designed to translate the vision into practical steps on the ground. 4. Recommend ways in which Amway could enhance and develop its impact on making every child matter.

D E B A T E

Public-private partnership

in infrastructure

Will the Planning Commissions suggestion to encourage private participation in infrastructure projects help attract investment? Three experts put PPP under the lens.

ISSUESWhat are the different kinds of public-private partnerships ? Is it privatisation through the backdoor? Are contracts sufficiently transparent?

KAMAL NAYAN KABRARetired Professor IIPA, Delhi PUBLIC-private partnership (PPP) in infrastructure development seems to owe itself basically to three factors: resource crunch facing the state, its preference for a lean and thin government and relative ease of imposing user charges. The priv ate partner, mainly a corporate entity, is likely to supplement resource availability of the state. As for management effectiveness and flexibility, accepted wisdom does not consider ownership pattern as such, whether exclusive or mixed one, to be greatly relevant. Our private corporate sector is a net deficit sector in terms of savings. Since the 90s, private corporate savings did not exceed 5% of GDP. On the other hand, private corporate investment over this period has varied between 5.4% to 8.2% of GDP. Obviously, one is barking up a wrong tree for resource supplementation by means of PPP. Both the government and India Inc have to mobilise resources from the common kitty, the household sector or the external sector. It would be naive to hold that the private sector has greater and better capabilities to do so than the public . The rationale for user charge pricing depends on the type of infrastructure (e.g., merit service with large external economies), and the possibilities of cascading effects of user charges on the rest of the economy. Exclusive fixation with additional financial resources may well be a classic case of being simply penny-wise. It is aversion towards price discrimination and equity that seems to necessitate shooting from the shoulders of the private partner. That such devices do not necessarily reduce the political difficulties can be seen from the controversies surrounding power pricing and subsidies after PPP in the power sector. So far the PPP route for infrastructure, despite tax sops, near monopoly market situation, control over vast tracts of land at rather low prices, the external economies and social prestige of partnership with the government, has not been able to cover itself with glory. Given the inherent reluctance of market forces to make highly capital-intensive lumpy investments capable of generating higher social than private rates of return with the additional factor of being prone to political interference and social pressures, the private sector may not be too enthusiastic about teaming up with the bureaucracy to provide and manage the infrastructure

facilities. But then much depends on the sectors and the terms of partnership , with liberal scope for cronyism. In highly oligopolistic markets such as the petroleum sector or natural monopolies as in the case of roads linking up the metros, or airports, with rapidly growing assured demand, the private partners have been forthcoming. But what do the private partners bring in that the state is not capable of obtaining on its own? Can one entice the corporates for rural connectivity, rural health, slum or workers housing and such like low financial returns, high social value projects? The short point is: what can be the motivation/ compensation for the private entrepreneurs to deviate from their chosen private gains criteria? Why should they mix up business with philanthropy, even with counter-guarantees, special treatment and vast arena for other profitable investments? The real punch line is: the juridical ownership distinctions have little real life meaning. If there is a high degree of symbiotic relationship between the government and business, whatever infrastructure development takes place is, in essence, a PPP, of course, with a rather narrow denotation of the term public and not in form but in content. Had it not been so, why would there be talk now of planning urban quality infrastructure for rural areas, after nearly six decades of development that gave the highest priority to infrastructure facilities? In sum, PPP is essentially a specific expression of the government is business and business is government syndrome. If the state has not succeeded, can the PPP? (The author is also president, C Achutya Menon Foundation)

VINAYAK CHATTERJEEChairman Feedback Ventures PPPs, like SEZs are the flavour of the month. The issue is no more whether PPPs can work, or not work. It is now about PPPs being designed to work and succeed. And there are nine reasons for this. First, finances. There is general consensus now that India should be investing a minimum of 10% of its GDP in asset-creation in infrastructure. There is also convergence that we are probably, as a nation, achieving about 5% GCFI (Gross Capital Formation in Infrastructure) as a percentage of GDP. The gap is huge. To get India to reach even 9% in the next five years will require investments to the tune of around $275-300 billion. Can the Centre and the states put together this quantum of investment in the next five years? No. So we need private capital in infrastructure. Second, structure. Unlike product-market economics, most public utilities and core infrastructure services rest on ultimate sovereign ownership of the underlying assets as well as, often, monopolistic conditions of operation. Without appropriate PPP formatting, private capital cannot flow in. Nor should it be allowed to. Third, international experience. Developing economies that have done well reveal that 10 - 20% of GCFI can be garnered from private capital sources. But relevant SPVs under viable PPP formats have to be created to serve as receptacles for receiving such private capital. Fourth, structuring deal-flow. Infrastructure projects require, on an average, about four years from concept to commissioning. So, if $275 billion is to be invested across five years, it means that there must be a ready-toinvest pipeline of projects of at least $220 million at any point of time. Does the governmental system have the capacity to structure, develop and execute $220 million worth of projects every year ? Not really. You need the private sector to play a complementary role. So PPP. Fifth, managerial acumen. PPP is not only about bringing in capital, its also about bringing in private sector

efficiencies and best practices in to public utilities management. These can be achieved through PPP formats that are in the nature of operating contracts linked to service-delivery standards. Sixth, independent regulators. PPPs need a facilitative environment. Across many sectors, there is growing realisation of the benefits of independent regulatory authorities that stand as neutral umpires refereeing conflicts across different stakeholders. Seventh, transparent selection. Successful PPPs have much to do with how the private partner is chosen. And with much dirty linen on this subject having been washed domestically and internationally, it is crystal clear that the best bet is a transparent bid process using one rational discriminant criterion. And that those involved in developing the project and bid criteria, cannot be allowed to bid for it also. Eight, market access versus privatisation. PPPs in the Latin American context have broadly been achieved by privatisation with the sovereign selling the assets or its controlling stake. In emergent Asian economies the preferred route seems to be by allowing market access for private players into hitherto closed markets. This seems doable in the current coalition context of India s political economy. Nine, political economy of PPPs. Unbridled free-market capitalism, as well as dominant state control have both been seen in their best and worst forms in the 20th century. The learning for the 21st century is that public capital (coming as it does, tied-in with the sovereign responsibilities and pub lic accountability) and private capital (tiedin with private sector efficiencies and incentives) both have to learn to work with each other in a mature manner. PPP formats have to be made to work ! (The author is also the chairman of CIIs National Council on Infrastructure)

JAYESH DESAINational Director (TAS) Ernst & Young P UBLIC Private Partnership (PPP) is a co-operative venture between the public and private sectors. It is built on the expertise of each partner that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards. This partnership ensures maximum efficiencies and innovations of private enterprise and provides capital to finance governments social programmes. Besides, risks are allocated on the basis of the capability of players to manage them efficiently and hence maximise value to all. There are various models of PPP ranging from straight contracting out to complete privatisation. The models primarily followed in India are build-operate-transfer (BOT) / buildown-operate-transfer, build-own-operate (BOOT), concession, design buildfinance-operate, management contract and asset sale. These models can be modified and structured according to the needs of the project such as roads, ports and metro rail. Very recently, contract for constructing the first metro link in Mumbai was awarded on a BOOT basis. This suggests that PPP model is beginning to get adapted in meeting a variety of infrastructure needs. PPP suits the need of the government agency and private parties and even permits undertaking projects which would otherwise be unviable. In some cases, even though PPP models allow for exclusive right over public assets, it does not suffer from the evils of a monopoly i.e., high user charges or low service quality. The government has introduced competitive bidding to decide on lowest user charges or provide viability gap funding to safeguard the interests

of the consumers. The contracts are designed to ensure quality of service. The selection process to award contracts follows clear and transparent methods. Comments are invited from all stakeholders during pre-bid meetings to ensure fair treatment to all parties involved. The qualification criteria is elaborated in the official document and adhered to during qualification assessment of the interested parties. The government may encourage greater transparency in awarding contracts by making public the details of the winning bid along with the nature of the contract awarded. This will instil greater confidence in the process and make it more palatable. The PPP model, however, is not devoid of shortcomings. If the model is not carefully structured, it may lead to loss of public control. It is also seen by organised labour as a case of job loss. But these issues may be addressed by ensuring regulatory monitoring and incorporating specific provisions in the contract. In a fast growing but capital starved economy such as India , PPP is a viable alternative to public funding of infrastructure. Benefits derived by users of infrastructure created under PPP outstrip user charges paid by them. BOT model has been refined to suit Indian conditions by NHAI for awarding road construction contracts. As a part of its plan to uplift the road infrastructure, the government has outlined over 50,000 km of road projects over the next 10 years at a cost exceeding Rs 1,80,000 crore. It is expected that about 15% of the project cost would come through private sector participation. By involving the private sector, the government could free funds up to Rs 30,000 crore for other social programmes. PPP has also been used successfully in port concession agreements. At one of the large ports in India , a container terminal was given on BOT basis. It was targeted that only 50% of the capacity will be reached in 10 years. However, the terminal exceeded its capacity in the fourth year of its operation. On the other hand, another terminal at the same port, managed by a government entity, had about 65% utilisation. The inclusion of pri vate player had improved throughput for the port and enhanced efficiency. These developments seem to suggest that PPP model has the potential to become cornerstone for funding infrastructure projects in India .

A new level of PPPs for a new IndiaPrivate-public partnership, one of the biggest gains of 2009, is here to stay and work in a truly effective direction to build India the way all of us dream of. The only investment needed is the will to act, says Harsh Goenka

HOW does one choose one impactful event from a year full of such frenetic activity and colossal happenings both in In dia and world over? Yet, as I sift through the numerous options, one major corporate event stands out in my mind that I believe has changed the rules of the game, hopefully, forever. The shock of the Satyam fiasco notwithstanding, it was the sheer rapid, systematic and cohesive response to control the fallout from the fraud, that has re-written the code, in fact set a new path, on joint initiative between government and private enterprise. Just this one bad apple and several international analysts had already begun questioning the quality of corporate governance in India . And the final solution that emerged has sown the seeds of the first true manifestation of what we have always been talking about ad nauseam private-public partnership . At a time when government financial bailouts were the order of the day on Wall Street, we showed the world that intellectual capital could do the job even better. The government of Indias management bail out of Satyam in partnership with private enterprise is undoubtedly one of our biggest achievements. And I think its important to remember that. Until now, PPP has been a muchabused clich in both corporate and economic policy making circles. At various fora, be it CII conferences, the World Economic Forum Summit or even policy papers of the Planning Commission, whenever the

term is used, it is always accompanied with scepticism and exasperation. When policymakers talk of PPP, some see it as sign of the government throwing up its arms and asking the private sector to plough in its profits to create public infrastructure, and essentially plug the breaches the government ought to have. Conversely, doubts of crony capitalism, and profiteering arise when an industrialist articulates the need for PPPs. It must have been a difficult decision for the government to step in especially when there was little clarity on the extent of Ramalinga Rajus wrongdoings and the impending liabilities. But, its decision to draft in a caretaker board comprising some of India Incs best known and trusted names was nothing short of a masterstroke. Exceptional situations need exceptional actions. While its easy for us to pillory the government for its actions or inactions, in my opinion it hasnt got enough credit for acting quickly and decisively. I am told it took a personal call from the Prime Minister to Deepak Parekh to convince him to become the chairman of the temporary board. In fact, Deepak Parekh himself likened his teams job to that of a bomb disposal squad. They were thrust into a job to diffuse a ticking time-bomb without quite knowing where the various wires led. Given the circumstances, they did an excellent job of shepherding a disgraced company into the hands of new competent owner through a transparent auction process, without compromising the interests of Satyams minority shareholders, employees and clients. The final price that Tech Mahindra paid for Satyam, and the kind of big-money counterbids Satyam attracted, proved that it was no distress sale. Visualise the scenario: There are six leaders from the private sector including Tarun Das and Kiran Karnik who were put into a room by the government, whove never worked together, but bring different skills to the table, with the mandate of saving another private company in the national interest. They all worked round the clock, meeting clients, giving confidence to the internal team and meeting with the investment bankers. And, the happy end result was achieved in less than 100 days. Now, if this isnt the perfect PPP, Ill be glad to hear from the sceptics, what is? Far too often, mistrust from either side (public and private ) has scuttled such partnerships of great potential. ISAY that was the beginning because we then saw the appointment of former Infosys CEO, Nandan Nilekani, undoubtedly one of the brightest minds in corporate India , to spearhead the Unique Identification Authority of India . In a fastgrowing economy, where private enterprise is flourishing and as a result, governments tax collections buoyant, economic capital is not so much of a concern for either. To solve the countrys big ticket problems what is in more urgent need is intellectual capital, which I am convinced is in abundant supply in the country. All it needs is a vision to harness it. Just as Nilekani was handpicked to head an ambitious and mammoth project to provide a unique identity card to every Indian that allows for slicker state delivery mechanisms, the government has at its disposal several upright, intelligent and committed-to-the-national-cause business leaders with proven track records. It is vital we build on the confidence and trust strengthened during 2009. Why not entrust the task of seeing key projects in road building, hydrocarbons and the bleeding national carrier Air India through, to demonstrated talent in the private sector? Similarly, education, another priority sector for the government is a basket case of greater private sector expertise. The Knowledge Commission constituted by the prime minister himself is in place consisting of a few representatives from the Indian industry that has made several noble recommendations. Why not perhaps expand the Commission to put in place another one to monitor implementation of several government schemes pertaining to education? On another front, Indias relationship with the United States is undergoing a paradigm change. Commerce is as important in our engagement today, as

geopolitical interests. It may not be a bad idea for us to have someone of the stature, ability and intellect of Infosys cofounder N R Narayana Murthy as ambassador in Washington. The implications are large and the rewards significant. Private-public partner ships, call it by whatever name, and clearly one of the biggest gains of 2009, I hope, is here to stay and work in a truly effective direction to build our nation the way all Indians dream of. The only investment needed is a will. There is indeed already, a way. (The author is chairman, RPG Enterprises)