The Hindu : Front Page : A blot on corporate image: PM

Online edition of India's National Newspaper
Sunday, Jan 18, 2009
ePaper | Mobile/PDA Version

Front Page

Front Page

A blot on corporate image: PM

Meena Menon

Says Satyam scam shows how fraud in one company can inflict suffering on many

MUMBAI: Prime Minister Manmohan Singh has described the Satyam episode as “a blot on our corporate image.”

Speaking at the ET awards function here on Saturday, Dr. Singh was categorical that it indicated how fraud and malfeasance in one company can inflict suffering on many and can also tarnish India’s image more broadly.

He said the government was determined to unravel the full nature of the fraud and to punish those involved under due process of law.

He urged corporate leaders, many of whom were present on the occasion, to look closely into their operations to ensure that their systems are fully operational and fraudulent activity was effectively prevented.

Corporate leaders and managements hold positions of trust for shareholders, workers, and other stake holders, he said. “I seek your support in setting the highest standards for Indian industry so that the world can say that we emerged from the Satyam scandal stronger and more credible.”

Turning to the economic slowdown, Dr. Singh said superior economic performance would not be easy in the year ahead. The global economic horizon is cloudier than it has been for a long time. It would be a testing time for the economy and for individual businesses in all sectors.

He emphasised that India’s problems would not be over in the current year. The difficult period will continue into 2009-10.

He pointed out that fortunately the rate of inflation had eased considerably. Inflation was now 5.2 per cent and was expected to decline further, giving flexibility for monetary policy.

He said a global crisis of this magnitude was bound to affect India and it has. Export demand had contracted. The stock market had come down sharply, as it had all over the world, posing severe financing difficulties, in addition to the hardship caused to individual stock holders. Traditional sources of finance had dried up.

While the range of steps taken within a few weeks was unprecedented, he recognised that they did not take care of all problems. This was because domestic policy action could not completely negate the effect of a global downturn as severe as the one today. “We can at best minimise its negative impact. There will be a full recovery to our normal economic potential, but this will take place when the global economy reaches normalcy,” he said.

He said growth in the current year would be lower than last year. The GDP grew by 7.7 per cent in the first half of 2008-09. It would be much lower in the second half of the year, Dr. Singh said.

The latest estimates for the final outcome in 2008-09 vary between 6.5 and 7 per cent.

However, he said that while the exact figure is not critical, the important point is that although growth is lower it is still much higher than most other countries.

Printer friendly page
Send this article to Friends by E-Mail

Front Page