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December 02, 2010

Philanthropy Grows Slowly Among India's Wealthy

An Indian billionaire's pledge to donate nearly $2 billion to fund education programs has raised hopes that more of the country's super-rich will follow his example. Rapidly growing wealth in India contrasts sharply with the widespread poverty in the country.

Software tycoon Azim Premji's decision to transfer shares valued at around $2 billion in his IT company Wipro to a new charitable trust is the largest philanthropic donation by an Indian.  

The money will go to a new charitable trust that funds rural education and other development programs. Premji, India's third richest man, said in a statement that he wants to contribute toward building a better society. Nearly one third of India's one point two billion people are illiterate.

The donation has raised hopes that other wealthy Indians will follow in his footsteps.

Experts say Indians have a long culture of giving, but much of it goes to household staff, the immediate community or the local temple.

They say a culture of organized, charitable giving by rich Indians and corporations has been slow to develop, even though the number of super-rich is growing rapidly as the economy races ahead.

India has 52 billionaires and over 125,000 millionaires. But philanthropy expert Priya Vishwanath, says barring a handful, large-scale giving has lagged among the wealthy.

"If you consider high-net worth giving either the way it is practiced in the United States, or United Kingdom, I think India has a long way to go….for instance there are serious doubts whether the kind of pledges that Bill Gates or Warren Buffet have made, whether that kind of giving can actually take place in India," said Vishwanath. "But having said that, the examples of Premji are all encouraging signs of high net-worth individuals engaging with philanthropy."

In India, individual and corporate donations made up 10 per cent of all charitable giving in 2009, compared to 75 per cent in the United States, according to a study by global consultancy Bains.

Experts say since India's wealth has mostly been created in the past decade, many of the rich may not yet be ready to part with their money. But they say a changing mindset to philanthropy will happen sooner rather than later.

There have been growing calls for India's wealthy to do more for poor people, whose lives have not been touched by the economic boom. Nearly 500 million people live on less than two dollars a day. Millions of children are malnourished and out of school.