The Government of India is considering an industry proposal requesting processes of self-certification vis-à-vis industries adhering to laws of the land. Is this appropriate?

The Times of India reported that following a meeting with members of the Indian Industries, the Finance Minister P. Chidambaram said the industry has promised to provide a list of laws where self-certification could take place so that inspection could be an exception audit. "This would to a large extent eliminate what is well known as Inspector Raj."

The argument presented would highlight corruption in the Indian bureaucracy as well as the presence of slow processes and conclude that Indian Industries being the growth engine of the country and the force behind India Shining should be allowed to audit themselves and follow self-certification programs so that rate of growth would increase even more. Surely a credible argument!

However, an important question raises its head – the credibility of Indian Industries to regulate or audit them selves. A couple of years ago, Supreme Court Monitoring Committee set up to review environmental pollution by Indian Industries found over 10000 cases of pollution and effluent dumping and other violations of environment guidelines. These cases included numerous multinationals including Aventis, and Lever as well as local companies.

SCMC filed charges against Aventis – another bio-based MNC – for creating a fake company to inappropriately dispose off its mercury wastes. It also filed charges against Hindustan Lever for its dumping of tones of mercury in Kodaikanal. Ironically, in both cases, the local governments have been tardy or perhaps corrupt, neither holding these companies accountable for their violations nor protecting the rights and the health of local communities.

In the more recent past, other large names such as Coca Cola has been found guilty of corruption in accounting where a UP court held that the company had followed innovative accounting practices to evade taxes over Rs 1 crore (This is of poor quality and in Hindi. In the document, the main conclusion that Coke owes Rs 3 crores is readable on page 7), had occupied village land illegally and had also been dumping heavy metals in and around the plant site. Again, ironically, the local and central government has done nothing to hold Coke accountable to its violations and to this date, even after two years of the verdict, all of the above encroachments have not been resolved.

In another case, Ranbaxy (another big Indian name) was ruled by the Himachal High Court to being irresponsible vis-à-vis its waste and laid down processes that the plant in Himachal had to follow. This was based on studies done by local environmental and civic society groups.

These examples only provide the face of over 10000 willful violations in a year that SCMC reported. Can the Indian Industry then be trusted to be honest in auditing itself? The answer is a clear no. By considering this suggestion, the government is destroying any checks that may exist to hold the Indian Industries accountable and to protect the rights of local communities. In fact, the government has already weakened these checks when it ironically weakened environmental guidelines that industries need to follow in the face of the large number of violations. It took a rather ridiculous sense of justice to reduce illegal practices by industries – it weakened the laws that protected communities.

It is under this same pressure from the industrial lobby that the government has consistently failed to act to protect the rights of local communities whether it is the case of Hema Chemicals dumping corrosive and toxic metals into water bodies, Coke bottling plants, or other examples listed above.

In addition, there are numerous laws that are often ignored – including child labor laws, laws on minimum wage and the government’s commitment to end casual labor as part of its commitment to International Labor treaties. Even today, owing to corruption and to weak mechanisms of accountability, these laws are not implemented – by small units as well as large companies. Processes of self-audit will only make this worse.

Not only do these Indian and Transnational Industries have no history or credibility to honestly function, any process of self-check will end any accountability they have to communities or to democratic processes. In addition, the government has already presented a track record of eroding laws that protect the rights of people.

In such a situation, this suggestion of self-auditing is ridiculous and must be presented with the appropriate reaction – ridicule. Any processes to weaken accountability will only increase externalities that the industry dumps on our communities, it will further marginalize these communities .

- Sanat Mohanty