Corporate governance in India, evolution and challenges

In the wake of recent financial scams in India and in the context of the global financial crisis, the term corporate governance has become a topic of hot debate. Inequality, glorification of greed, lack of concern for society, feudal mindset and manifold regulations are some reasons responsible for increase in the rate of scams. India has one of the best corporate governance laws but poor implementation together with socialistic policies of the pre- reform era has affected corporate governance. Concentrated ownership of shares, pyramiding and tunneling of funds among group companies mark the Indian corporate landscape. Good corporate governance practices are a sine qua non for sustainable business that aims at generating long term value to all its shareholders and other stakeholders. This paper highlights the importance of corporate governance and its impact on business activities in the recent past. It also deals with the evolution of corporate governance in India, the various initiatives and committees that are taken up by the Indian Government to safeguard the corporate governance practices. This study describes the Indian corporate governance system and examines how the system has both supported and held back India's ascent to the top ranks of the world's economies. It also deals with the challenges ahead of the corporate governance practices in India.