Tuesday, 10 December 2019

Ugly Wealth

Updated: June 11, 2011 11:52 am

Last week a friend forwarded me a mail that had a picture of the proposed “yacht” that India’s second richest man Mukesh Ambani has ordered. It will cost 20 million Euros (about Rs 127 crore) and be parked at Beach Candy, Mumbai. A famous French shipbuilder company and one from Monaco have joined hands together to build this yacht with enormous dimensions. It is 58 meters long and 38 meters wide. The yacht will have a floor area of 3400M2 (36600 sq feet) and accommodate 12 passengers and 20 crew members. It will have three decks, a 25-metre pool, a spa, a helipad, a 100M2 (1080 sq feet) sauna, gym and massage room, a promenade of 130M2 (1400 sq feet), a music room, a dining room, a cinema, a reading room, sun decks, suites, terraces and a lounge. The luxury will be at the ultimate level, with the decks being connected by stairs as well as an elevator. Ambani’s “personal suite”, with an area of 200M2 (2150 sq feet) will cover completely the third deck. The yacht has the shape of a horseshoe and has a retracting glass solar panel roof. For the guests, there will be five suites with sea views situated on the middle deck.

            Incidentally, since last October, Mukesh and his family have been living in arguably one of the richest homes in the world. Called Antilia, named after a mythical island, it has 27 storeys, soars to 173 metres and is worth an estimated Rs 4600 crore. It contains a health club with a gym and a dance studio, one swimming pool, a ballroom, guestrooms, a variety of lounges and a 50-seater cinema. On the top floors, with a sweeping view of the city and out over the Arabian Sea, are quarters for the 54-year-old tycoon and his family. Overall, there is reported to be 37,000 sq metres of space, more than the Palace of Versailles. To keep things running smoothly, there is a staff of 600.

            I am giving this background in the wake of a recent interview that Tata group chairman Ratan Tata gave to a British newspaper, The Times. Though Tata now says that parts of his interview have been projected “out of context”, he has not disowned its text. In the interview, Ratan questions Mukesh Ambani’s need to live in Antilia. “It makes me wonder why someone would do that,” Tata says. “That’s what revolutions are made of,” he adds. “The person who lives there should be concerned about what he sees around him and (asking) can he make a difference. If he’s not, then it’s sad because this country needs people to allocate some of their enormous wealth to finding ways of mitigating the hardship that people have.” The implication in Ratan Tata’s comments to The Times is that he cares about India’s poor. The paper says that while Tata is wealthy, he claims not to be a billionaire. “He lives in an apartment with a sea view but, according to those who know him, he lives modestly compared with some of India’s other rich people.” Depicting Tata as a man of conscience for his concern over “the widening gap between rich and poor in India”, the paper quotes him as saying, “We are doing so little about the disparity. We are allowing it to be there and wishing it away.”

            Tata, of course, talks of the money that the Tata group puts into social causes. “What surprises many is that we are not a corporation just driven by the bottom line, but we are able to allocate 4 or 5 per cent of our profit to social causes and to philanthropy and still are able to provide returns to our shareholders,” Tata emphasises. It is a fact that Tatas have institutionalised philanthropy, making it an act of corporate social responsibility and not charity. They, like a Rockefellar and Carnegie in the United States, have set up some of the finest scientific and social institutions in the country. To a certain extent, the Birlas have done the same. But rest of India’s corporate houses have not distinguished in philanthropy, their generosity mostly centring on temples, churches, mosques and community centres.

            No wonder why when billionaire philanthropists Bill Gates and Warren Buffett of the Unites States came all the way to India in March to urge India’s tycoons to take up charity and help the hundreds of millions of impoverished people in the country, nothing much happened. The result was similar to their mission in China in September, where they had little success in sparking a charitable movement among China’s growing number of tycoons. As large a contingent of 70 Indian tycoons met Gates and Buffet in Bengaluru, but apart from NR Narayana Murthy whose wife Sudha runs the Infosys foundation that focuses on healthcare, education and social rehabilitation for the underprivileged and Wipro chairman Aziz Premji, who liquidated a small part of his stock in Wipro last year and pledged US $2 billion towards education and social projects, no leading Indian business house promised anything notable. In fact, the quantum that rich Indians are willing to donate are peanuts in comparison to Gate’s $37 billion foundation and Buffet’s $200 billion empire, of which 99 per cent of Buffet’s share will be going to charity.

            It all started when Buffet and Gates, two richest men of the world in that order, set up together in their home country, the United States, the “Giving Pledge”, a sort of club for billionaires to give away some of their billions to the world’s poor or disadvantaged. Since then, a host of famous rich guys, including Paul Allen, Michael Bloomberg, Ted Turner, Carl Icahn, a Hilton and a Rockefeller have signed on. The pledge doesn’t ask for specific donations, nor does it track giving; rather, it asks that a pledge maker commit to giving away the majority of their wealth. The club has now more than 50 donors, mostly Americans. The latest to join “Giving Pledge” has been billionaire founder of social network Facebook Inc., 26-year-old Mark Zuckerberg.

            Coming back to India, figure given by the Forbes magazine, out of world’s 1,210 billionaires, 55 are Indians. In a country where about 27.5 per cent of the people live below the poverty line, these 55 billionaires control, among them, as much as 20 per cent of India’s $1.3-trillion economy. However, according to a study by consultancy firm Bain & Co, charity spending by them totalled just $7.5 billion in 2009, which is about 0.6 per cent of the country’s GDP. Why is this so? One possible reason could be the sociological factor. Here in India we want to leave everything to our children so that they lead a comfortable life. In contrast, in the West, people don’t leave behind much to family or children. There are wild stories of how multi-billionaires will their entire wealth to pet dogs and cats! In fact, none other than Warren Buffett once said, “I want to give my kids enough so that they could feel that they could do anything, but not so much that they could do nothing.”

            There is also the peculiar pedigree of the Indian business class. As journalist Aakar Patel enumerates, India’s richest man is a Baniya (Lakshmi Mittal, world’s sixth richest with $31.1 billion), India’s second richest man is a Baniya (Mukesh Ambani, $27 billion), India’s third richest man is a Khoja (Azim Premji, $16.8 billion), India’s fourth richest men are Baniyas (Shashi and Ravi Ruia, $15.8 billion), India’s fifth richest person is a Baniya (Savitri Jindal, $13.2 billion), India’s sixth richest man is a Baniya (Gautam Adani, $10 billion), India’s seventh richest man is a Baniya (Kumar Mangalam Birla, $9.2 billion), India’s eighth richest man is a Baniya (Anil Ambani, $8.8 billion), India’s ninth richest man is a Baniya (Sunil Mittal, $8.3 billion). India’s 10th richest man is a Parsi (Adi Godrej, world’s 130th richest with $7.3 billion).

            As Patel says, “Score: Baniyas 8, Rest of India 2. If we consider the Gujaratis Godrej and Premji (from the Lohana caste) as coming from mercantile communities then actually Rest of India wasn’t playing this match so far.” This finding goes well with the stereotype that “Baniyas”, by nature, are very miserly people.

            However, I have a slight problem with the theory that philanthropy always eradicates poverty. In many parts of Asia and Africa, it has been seen that most of the money, as in the case of governmental schemes, do not reach the intended targets, middle men grabbing substantial amounts in the process. Since the Second World War, countless billions have been invested in Third World development. “It has been a colossal failure, a product of good intentions, grandiosity and woolly thinking”, well-documented in William Easterly’s book, the White Man’s Burden. That is why, there are merits in the alternate economic theory that the best way the philanthropists could eradicate poverty is to invest their excess money in new enterprises, either their own or of others, that will make more jobs and more wealth for more and more people.

            Perhaps, Mukesh Ambani believes in this alternate theory. But, no economic theory could explain his “ugly” display of wealth, mentioned above. That way, he is totally un-Baniya like!

By Prakash Nanda

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