Are the Corporates serious about Development Initiatives ?

Corporate response to the calamities in Gujarat and Orissa - A study in contrast

The last five years has seen, India, the largest democracy and one of the fastest growing economies of the world being struck by two of the worst natural calamities of unprecedented magnitude. The Orissa Cyclone in the year 1999 and the Gujarat earthquake in the year2001 devastated the country. Apart from the sheer scale of the disaster and the loss of lives, these two calamities punctured the Indian economy, which was already reeling under global recession. But it is a different story that the country emerged unscathed by these unforeseen disasters with an overall growth rate of 6%during this period, emerging as one of the leading nations of the world.

One of the reasons for this could be the large-scale aid that came into the country from various international agencies, governments and development organisations. The corporate sector in India also woke up to the reality and contributed in whatever way it could. But the glaring differences in aid, relief and publicity by the corporates in these two states, Gujarat, the second most industrialised state in the country and Orissa, one of the poorest states in India raised many eyebrows and questions on CSR practices in general and the popular assumption that the corporates are more concerned about image building, publicity and creating a market for themselves rather than following ethical and need based practices for social causes.

Orissa, one of the poorest states in India where more than 48% people are said to live below the poverty line is prone to natural calamities like flood, droughts and Cyclone. The state has an agro-based economy with very few private sector initiatives of large magnitude. On October 29th 1999, a violent cyclone with sustained winds of 160mph hit the states coast. It was recorded as one of the worst cyclones in meteorological history with one of the highest wind speeds ever recorded-223 mph. The cyclone was so devastating that it continued for 24 hours while most cyclones fizzle out after three or four hours. The strong winds hurled 30-foot waves on to the shore washing away entire villages, flattening mud huts and drowning thousand in the process. While official figures put the death toll around 10,000. Unofficial figures point out that more than 40,000 people were killed.

Worse, the cyclone also destroyed the livelihood of the coastal areas farming community as it saturated more than 1 million hectares of cropland under salty water and killed more than 406,000 livestock. It stuck just three weeks before harvest season wiping out paddy fields, sugar cane and vegetable crops. The massive disaster obliterated thousands of schools, clinics , roads and communication systems and people survived for days without food or shelter till help arrived.

Gujarat, on the other hand is a study in contrast to Orissa. It is one of the richest states in India and is home to many refineries and petrochemical plants. The state ranks first in the country for the production of some cash crops and is dotted by 41 seaports offering easy access to the Middle East, Africa and Europe. It also houses India's busiest port at Kandla. Gujarat is known for its steel and textile plants and has a high concentration of pharmaceuticals and is the home of diamond trade in India. The state boasts of a wealthy expatriate community concentrated mainly in Europe, North America and Africa. The state has always attracted foreign investment because of its economic policies and good infrastructure. Several big international names including General Electric, General Motors, Siemens, AT&T and Unilever have set up shop in the state.
On 26th of January, 2001 a terrible earthquake measuring 6.9 on the Richter scale stuck the state with its epicenter near Anjar in Kutch district. The quake wiped out entire rows of house and brought about much destruction in three districts of the state. Official figures put the death toll at around 7,000 while unofficial figures put it around 20,000. The district of Bhuj was the worst affected with entire villages reduced to a rubble.

The reaction of the corporate sector to both these disasters was positive but present an interesting comparison. It should be pointed out that the private sector has good commercial opportunities in disaster management with engineers, consultants, software designers, insurers, transporters and suppliers of goods having business opportunities. But the disparity in contributing, money and materials, setting up camps, rushing relief materials and setting up long term joint projects for relief and rehabilitation to these two states was very glaring.
Even the media in India which is mostly controlled by business houses showed wide disparity in portraying the magnitude of the tragedy through news items, features and human interest stories. While the Orissa disaster disappeared from the centre of Media glare within a fortnight, Gujarat earthquake continued to hog the limelight for more than two months.

While it is very obvious that the cyclone that struck the state of Orissa was a disaster of much larger magnitude, the aftermath of this calamity was not portrayed in the intensity and sensitiveness it desired when compared to Gujarat which immediately attracted worldwide attention. Even international aid organisations, governments and business houses vied with each other in rushing relief and rehabilitation to Gujarat. There was huge publicity in the media with many large business houses organising press conferences to announce relief and rehabilitation measures.

While the corporates in India have always reacted to natural calamities in a philantrophic way by sending one time relief, ( for example, a pharmaceutical company might send a truckload of medicines ) the story in Gujarat was different. Many Corporates showed interest in collaborating with NGOs for long term rehabilitation work. Many apex business organisations like FICCI and CII also entered into collaboration with International agencies to run long term relief programmes in the state.

All this has raised many questions about the approach of the corporate sector towards development initiatives. The state has a fledging middle class with sizable purchasing power which is a huge bonus to the corporates to push their products in the market. They see it as an ideal oppurtunity to mix development with business. Moreover, even though large industrial houses withstood the quake, the industrial activity in Gujarat came to a standstill leading to huge losses . So in their own business interests, the corporates had to react in some way and play a part in bringing back normalcy to the state.

All this drives home the point that the corporate sector would prefer a clear win-win situation in implementing CSR initiatives. Gujarat being an upbeat economy with a massive middle class having enormous purchasing power offers a better opportunity for relief and rehabilitation work in terms of returns and publicity unlike Orissa.

Orissa is one of the poorest states of India with parts which are among the poorest in the world. Unlike Gujarat, It does not have a fledging middle class having purchasing power, the necessary ingredients to attract corporate intervention during relief and rehabilitation.

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