Business Ethics Assignment

DEBOJYOTI
CHAKRABORTY
INFORMATION MANAGEMENT

ROLL NO:-14
 CONTENTS
TOPIC PAGE NUMBER

1. DISCUSS BRIEFLY THE REASONS FOR THE 1

VARDHA ANDOLAN

2. ETHICAL ISSUES IN VARDHA VALLEY 2

3. DEVELOPMENT PLAN 4

4. SYSTEMATIC ISSUES 4

5. CORPORATE ISSUES 8

6. INDIVIDUAL ISSUES 8

7. WHAT WILL YOU DO IF YOU ARE IN VARDHA VALLEY 9

DEVELOPMENT PLAN?

8. OPINION AS THE MANAGING DIRECTOR OF VARDHA 9

VALLEY DEVELOPMENT PLAN

9. UTILITARIANISM 10

10. MORAL/CORPORATE RESPONSIBILITY 12

11. JUSTICE AND FAIRNESS 12

Business Ethics | Debojyoti Chakraborty, Roll No-14, IM-2 2

Business Ethics | Debojyoti Chakraborty, Roll No-14, IM-2 3
 DISCUSS BRIEFLY THE REASONS FOR
THE VARDHA ANDOLAN

In year 1985, the Vardha Valley Development Plan (VVDP) was taken up by the government of
India. The project would displace more than 1million people. A compensation package was
announced for the displaced populace which included:
1. Agricultural land (2 hectares per family).
2. Residential lands (500 Sq. m).
3. Cash compensation for land being submerged.
4. Grants for construction of houses, agricultural implements and live stocks.
5. Community benefits including construction of roads, primary schools, and health care
centers and children parks.
But, the government failed to acquire any agricultural lands for resettlement of villages, rural
communities and families. Most of the displaced people received only house plots and low cash
compensation, and families were broken during the rehabilitation.

The Andolan Members primary issue was the Manasorover project, which was comprised of a
455 ft’ high dam,214 km long reservoir , a river bed power house, power transmission lines, a
main canal and an extensive Irrigation network.

1. The Mansarovar project would cost around US $4600million, was aimed to irrigate 1.8
million hectares of land, providing drinking water to over 40 million people and
generating 1450 MW of power. But, according to the Andolan members them the project
cost over $9000 million, and they said that mansorover dam was never planned with the
intension of providing drinking water. Renowned energy analyst predicted not more than
50 MW of power can be produced annually, which would make the dam a “Net consumer
of energy”.

2. The irrigation was to be carried out through an 80000 km long network of canals , which
required approximately 85000 hectares of additional land, complex engineering and huge
resource allocation.

The VVDP lacked a comprehensive environment impact assessment plan and would
submerge 14000 hectares of forests and disrupt aquatic ecosystems.

3. Impact on Upstream section of the dam: In the upstream section the dam, valuable
forest and terrestrial biological diversity would be lost. The forest of the MSD
submergence zone contained a huge diversity of flora and fauna, which could support
over 70000 people. Compensatory forestation and wild life conservation measures were
planned but it was not a feasible way of recovering the loss of this forest or saving the

Business Ethics | Debojyoti Chakraborty, Roll No-14, IM-2 4

 biological diversity. In case of MSD, compensatory afforestation was done in Kutch, an
ecological zone completely different from the Vardha Valley.The forests in the Vardha
Valley were rich in teak, Bamboo, Mahua, and Salai trees. According to the local tribals,
the flora in the submergence zone contained over 150 species, which are of economic,
nutritional and cultural importance.The Vardha Valley also, had a huge diversity of the
aquatic life. If the upstream aquatic eco system would be disrupted, ‘the marsh
crocodiles’ would be largely affected. The officials try to focus on saving commercially
useful fish, which was the main diet and source of livelihood of the tribal people, but very
less was done to protect the aquatic fauna and flora.
The MSD reservoir could result in water logging in the plain areas of western India,
which were sandwiched between the reservoir and Vardha Valley. The water logged
lands in the surrounding areas would increase the incidence of diseases like Malaria.

4. Impact on Downstream of the dam: In the downstream of the dam, there were high
chances of negative impact on aquatic life, as it resulted in the destruction of Giant fresh
water prone fisheries. It could result in flash floods. The construction of the dam would
change the volume and flow of water in the downstream river and the dam would lock the
flow and deposition of the nutrient-rich silt to the downstream area. These changes would
lead to an adverse impact on the downstream river, reducing fish migration and breeding,
increasing the concentration of the pollution in fresh water and changing the composition
of flora and fauna. This would also affect the fertility of the land. Vardha estuary was
likely to be adversely effected by the MSD. Salination and increased pollution of
underground water used for drinking and irrigation had taken place around the estuary
bank. Moreover, erosions could occur and coastal Geo morphology would change.
Irrigation of the Vardha Valley could have serious negative effect on some species. The
unique species of plants and animals in the arid area of rann in kutch could be also be
adversely effected.The eco-system of runn is a complex and delicate mixed of arid lands
where fresh water flooded from an inland area. Delicate balance of this eco system is
bound to be disturbed by the introduction of various “copious “amounts of fresh water
and most importantly mammals like the wild ass and birds would be threatened.

5. Impact on command area of the dam: The largest threat arising from MSD would be in
the command area. The major problems would be water logging and salination. As the
arid and semi arid areas, drainage is geared to low rainfall conditions, and the drainage
system is usually incapable of handling the much larger amounts of water brought in by
surface irrigation with the seepage from canals, over use of water by farmers, another
factors depending on the geo morphology of soil and sub soil layers. This lead to an
increase in accumulation of the water below the surface. Moreover, subsoil water in these
regions tends to be saline due to in adequate flushing by rain water. Irrigation water,
being saltier that rain water, adds more salts to the system leading to increased likelihood
of salination.

Business Ethics | Debojyoti Chakraborty, Roll No-14, IM-2 5

 ETHICAL ISSUES IN VARDHA VALLEY
DEVELOPMENT PLAN

1. SYSTEMATIC ISSUES

2. CORPORATE ISSUES

3. INDIVIDUAL ISSUES

SYSTEMIC
ETHICAL QUESTIONS RAISED ABOUT THE ECONOMIC, POLITICAL, LEGAL AND
OTHER SOCIAL SYSTEMS WITHIN WHICH BUSINESS OPERATES E.G. QUESTION
OF DISPLACEMENT, ENVIRONMENT, ETC.

PEST ANALYSIS OF VARDHA VALLEY DEVELOPMENT

PLAN (VVDP)
PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes
a framework of macro-environmental factors used in the environmental scanning component of
strategic management. Some analysts added Legal and rearranged it to SLEPT;
inserting Environmental factors expanded it to PESTEL or PESTLE.

Business Ethics | Debojyoti Chakraborty, Roll No-14, IM-2 6

 THE MODEL'S FACTORS

 Political factors are how and to what degree a government intervenes in the economy.

Political factors include infrastructure, tax policy, political stability, compensation packages
etc.

 Economic factors include economic growth, interest rates, exchange rates and

the inflation rate. These factors have major impacts on how businesses operate and make
decisions.

 Social factors include the cultural aspects and include health consciousness, population
growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors
affect the demand for a company's products and how that company operates.

 Technological factors include technological aspects such as R&D activity, automation,

technology incentives and the rate of technological change. They can determine barriers to
entry, minimum efficient production level and influence outsourcing decisions. Furthermore,
technological shifts can affect costs, quality, and lead to innovation.

 Environmental factors include ecological and environmental aspects such as weather,

climate, and climate change, which may especially affect industries such as tourism, farming,
and insurance. Furthermore, growing awareness of the potential impacts of climate change is
affecting how companies operate and the products they offer, both creating new markets and
diminishing or destroying existing ones.

ANALYSIS
A methodical way to approach the ‘systematic ethical issues’ of the VVDP would be to
undertake a PEST analysis.

POLITICAL FACTORS
1. Disillusionment of displaced populace: The VVDP would displace 35000 families mainly
in central India and 4000 families in western India. In all, over a 1000000 people would be
displaced. The government would stand the chance of alienating and disgruntling these
people, who largely belong to rural and backward classes of society. 1million people form a
Business Ethics | Debojyoti Chakraborty, Roll No-14, IM-2 7
 significant ‘vote bank’ and the government would not like to antagonize them. This may
result in internal differences within the government and make it irresolute. Also, in-order to
gratify the displaced people the government may have to allocate exorbitant compensation
packages.

2. Prospect of coming under attack from Opposition: People are generally averse to being
displaced and altering their normal way of life. Displaced people are often embittered and
angered. The opposition may exploit them to further their political cause. Apolitical
associations (in this case the Andolan members) and local committees may also create
opposition.

3. Misappropriation of funds and Nepotism: The delivery of welfare and compensation to the
displaced people would involve massive government machinery to reach the funds to the
grassroots in rural areas to over a million people. In the Indian context, this is quite a hurdle
as corruption; misappropriation and nepotism are a chronic illness plaguing the Indian
bureaucracy.

ECONOMIC FACTORS
1. Enormous benefit to agriculture and supply of drinking water: The Manasarovar project
would irrigate 1.8million hectares of land and provide drinking water to 40 million people.

2. Generation of Employment and Infrastructure: The VVDP would create enormous job
opportunities across all sections of society.

3. Threat to commercially useful fish: The commercially useful fish was the main diet and
source of livelihood of the tribal people. In the downstream, there would be destruction of
giant freshwater prawn fisheries.

4. Requirement of additional 85000 hectares of land for the irrigation canals of the
Mansarovar Dam Project(MSD).

5. According to ‘Andolan’ members the MSD would generate only 50MW of power
making it a net consumer of energy.

6. Colossal Cost of resettlement and rehabilitation of the displaced people: From the ethical
point of view it is vital to give appropriate compensation to the people being displaced. This
would enormously inflate the already massive cost (US $4600 million, according to
government estimates) of the VVDP. The additional costs would involve:
a) Agricultural land (2 hectares per family) i.e. 2*39000=78000hectares of land.
b) Residential land (500 sq. m) i.e. 500*39000=19500000 sq. m.
c) Cash compensation for land being submerged.

Business Ethics | Debojyoti Chakraborty, Roll No-14, IM-2 8

d) Grants for construction of houses, agricultural implements and livestock.
e) Community benefits including construction of roads, primary schools, healthcare centers
and children’s parks

SOCIAL FACTORS
1. Displacement of over 1 million people: The VVDP could not implement the
compensation packages it promised and failed to acquire any agricultural land for
resettlement of villages, rural communities and families were broken during the
rehabilitation. Also, for a period of time the displaced people had to put their lives on
hold and the normal course of their lives was disrupted.
2. Increase in the incidence of diseases like malaria: The waterlogged lands in the
surrounding areas (of western India) would increase the incidence of diseases like
malaria.
3. Submergence of forests containing trees of cultural importance: The MSD had in its
submergence zone 150 species of economically, nutritionally and culturally significant
trees, according to local tribals.

TECHNOLOGICAL FACTORS
1. Requirement of complex engineering and huge resource allocation in the
Manasarovar dam project: The irrigation was to be carried out through 80000km long
network of canals, which required complex engineering and huge resource allocation.

ENVIRONMENTAL FACTORS
The VVDP lacked a comprehensive environment impact assessment plan and would
submerge 14000 hectares of forests and disrupt aquatic ecosystems.

1. Impact on Upstream section of the dam: In the upstream section the dam, valuable
forest and terrestrial biological diversity would be lost. The forest of the MSD
submergence zone contained a huge diversity of flora and fauna, which could support
over 70000 people. Compensatory forestation and wild life conservation measures were
planned but it was not a feasible way of recovering the loss of this forest or saving the
biological diversity. In case of MSD, compensatory afforestation was done in Kutch, an
ecological zone completely different from the Vardha Valley.The forests in the Vardha
Valley were rich in teak, Bamboo, Mahua, and Salai trees. According to the local tribals,
the flora in the submergence zone contained over 150 species, which are of economic,

Business Ethics | Debojyoti Chakraborty, Roll No-14, IM-2 9

 nutritional and cultural importance.The Vardha Valley also, had a huge diversity of the
aquatic life. If the upstream aquatic eco system would be disrupted, ‘the marsh
crocodiles’ would be largely affected. The officials try to focus on saving commercially
useful fish, which was the main diet and source of livelihood of the tribal people, but very
less was done to protect the aquatic fauna and flora.
The MSD reservoir could result in water logging in the plain areas of western India,
which were sandwiched between the reservoir and Vardha Valley. The water logged
lands in the surrounding areas would increase the incidence of diseases like Malaria.

2. Impact on Downstream of the dam: In the downstream of the dam, there were high
chances of negative impact on aquatic life, as it resulted in the destruction of Giant fresh
water prone fisheries. It could result in flash floods. The construction of the dam would
change the volume and flow of water in the downstream river and the dam would lock the
flow and deposition of the nutrient-rich silt to the downstream area. These changes would
lead to an adverse impact on the downstream river, reducing fish migration and breeding,
increasing the concentration of the pollution in fresh water and changing the composition
of flora and fauna. This would also affect the fertility of the land. Vardha estuary was
likely to be adversely effected by the MSD. Salination and increased pollution of
underground water used for drinking and irrigation had taken place around the estuary
bank. Moreover, erosions could occur and coastal Geo morphology would change.
Irrigation of the Vardha Valley could have serious negative effect on some species. The
unique species of plants and animals in the arid area of rann in kutch could be also be
adversely effected.The eco-system of runn is a complex and delicate mixed of arid lands
where fresh water flooded from an inland area. Delicate balance of this eco system is
bound to be disturbed by the introduction of various “copious “amounts of fresh water
and most importantly mammals like the wild ass and birds would be threatened.

3. Impact on command area of the dam: The largest threat arising from MSD would be in
the command area. The major problems would be water logging and salination. As the
arid and semi arid areas, drainage is geared to low rainfall conditions, and the drainage
system is usually incapable of handling the much larger amounts of water brought in by
surface irrigation with the seepage from canals, over use of water by farmers, another
factors depending on the geo morphology of soil and sub soil layers. This lead to an
increase in accumulation of the water below the surface. Moreover, subsoil water in these
regions tends to be saline due to in adequate flushing by rain water. Irrigation water,
being saltier that rain water, adds more salts to the system leading to increased likelihood
of salination.

CORPORATE AND INDIVIDUAL ISSUES

CORPORATE-ETHICAL QUESTIONS RAISED ABOUT A PARTICULAR
ORGANIZATION’S ACTIVITIES, POLICIES, PRACTICES OR STRUCTURE E.G.
PROMOTION, TRANSFER POLICY.

Business Ethics | Debojyoti Chakraborty, Roll No-14, IM-2 10

The VVDP’s inability to live-up to its compensation packages shows the company in bad light,
in the ethical context.

INDIVIDUAL-ETHICAL QUESTIONS RAISED ABOUT A PARTICULAR

INDIVIDUAL OR GROUP WITHIN AN ORGANIZATION AND THEIR ACTIONS,
DECISIONS, BEHAVIOR, CHARACTER ETC.

These issues require internal knowledge of the corporation or particular actions of individuals
within the organization which are not clearly available in the case and we should not rely on
guess work.

WHAT WILL YOU DO IF YOU ARE IN

VARDHA VALLEY DEVELOPMENT PLAN
OPINION AS THE MANAGING DIRECTOR OF VARDHA VALLEY DEVELOPMENT
PLAN

To ascertain whether the execution of the VVDP would be ethically correct I would analyze the
situation through the various points of view or principles of business ethics. In effect, this
process would answer whether execution or rejection of the project would be the right thing to
do.

1. UTILITARIANISM

2. MORAL/CORPORATE RESPONSIBILITY

3. JUSTICE AND FAIRNESS

Business Ethics | Debojyoti Chakraborty, Roll No-14, IM-2 11

 UTILITARIANISM

UTILITARIANISM IS A GENERAL TERM FOR ANY VIEW THAT HOLDS THAT

ACTIONS AND POLICIES SOULD BE EVALUATED ON THE BASIS OF THE
BENEFITS AND COSTS THEY WILL IMPOSE ON THE SOCIETY. IN ANY
SITUATION THE “RIGHT” ACTION OR POLICY IS THE ONE THAT WILL
PRODUCE THE GREATEST NET BENEFITS OR THE LOWEST NET COSTS.

SOCIAL BENEFITS:
a) Enormous benefit to agriculture and supply of drinking water: The Manasarovar project
would irrigate 1.8million hectares of land and provide drinking water to 40 million people.
This would release thousands of farmers from depending on the vagaries of the
monsoon rains.

b) Generation of Employment and Infrastructure: The VVDP would create enormous job
opportunities across all sections of society. Not only would the VVDP directly employ
people but construction of canals would employ large number of people. The compensation
package offered to the displaced people would also generate massive employment
opportunities.

c) Power Generation: According to the government the VVDP would generate 1450
megawatts of power

d) Substantial Compensation Packages offered to the displaced people would raise their
standard of Living: The VVDP originally promised a very healthy compensation project;
which, if it were carried out would greatly help in uplifting the lives of the rural and
backward people being displaced.

SOCIAL COSTS

a) The Promised Compensation could not be delivered: The government failed to acquire
any agricultural lands for resettlement of villages, rural communities and families. Most
of the displaced people received only house plots and low cash compensation, and
families were broken during the rehabilitation.

b) Displacement of over 1 million people: The VVDP could not implement the
compensation packages it promised and failed to acquire any agricultural land for
resettlement of villages, rural communities and families were broken during the

Business Ethics | Debojyoti Chakraborty, Roll No-14, IM-2 12

 rehabilitation. Also, for a period of time the displaced people had to put their lives on
hold and the normal course of their lives was disrupted.

c) Large Scale Environmental Damage: The VVDP and especially the MSD would
extract a tremendous environmental cost on huge areas of central and western india. The
impact on the flora, fauna and demography in general would be gigantic.

 The project was not started with a comprehensive environment impact assessment. As a
result, this project would submerge 14000 hectares of land and is a menace for the
aquatic ecosystem especially the extinction of Marsh crocodiles.

 Due to the construction of dam, valuable forest and biological diversity of flora and fauna
would get lost which supports almost 70,000 people.

 The loss of valuable rich components from the zone could hamper their economic,
cultural and nutritional importance.

 The reservoir could cause the problem of water logging resulting in upbringing of
epidemic diseases like malaria.

 One of the important means of livelihood for the local people was the fish breeding. But,
the construction of dam would cause the salinisation of fresh water resources that
supports the breeding of fishes.

 The problem of soil erosion is also one of the major concerns because a large piece of
agricultural land would fall under the threat.

RESULT

After analyzing all the direct and indirect benefits of the VVDP and comparing them with
the direct and indirect costs of the project we must ascertain whether execution of this
project is for the greatest good for greatest number. The VVDP casts a shadow of
uncertainty over 1 million lives, does tremendous and irreparable damage to the
environment. Causes extinction of various flora and fauna and negatively affects the lives
of people who are dependent on agriculture, foraging and pisciculture. If we consider the
ethical viability of the project from a purely utilitarian point of view, the social costs
outweigh the social benefits. It would be impossible to go through with the project without
at least some agreement on the compensation of the displaced populace. It would be wise to
review the execution of the project; with special attention to the Manasarovar Dam Project
(MSD). It might be even wise to halt the MSD project and undertake a full scale
environmental impact assessment.
Business Ethics | Debojyoti Chakraborty, Roll No-14, IM-2 13
 MORAL/CORPORATE RESPONSIBILITY

MORAL RESPONSIBILITY IS WHETHER A PERSON IS MORALLY RESPONSIBLE

FOR AN INJURY OR FOR A WRONG, FOR BLAME FOR SOMETHING.
CORPORATE ACTS NORMALLY ARE BROUGHT ABOUT BY SEVERAL ACTIONS
OR OMISSIONS OF MANY DIFFERENT PEOPLE ALL CO-OPERATING
TOGETHER SO THAT THEIR LINKED ACTIONS OR OMISSIONS JOINTLY
PRODUCE THE CORPORATE ACTS. ALL THE PARTICIPANTS ARE
INDIVIDUALLY MORALLY RESPONSIBLE ACCORDING TO THEIR
PARTICIPATION IN THE ACTIONS OR OMISSIONS OF THE CORPORATE ACTS.

The VVDP is unable to pay the promised compensation to the displaced people. Therefore, they
breached their trust. The displaced populace had agreed to give up their land on the basis of the
compensation package. Therefore from the point of view of corporate responsibility, the issue
of compensation has to be dealt with first before any further headway can be made. Secondly,
the issue of environmental damage needs to be addressed. The environment is for everyone. It
cannot be damaged for the benefit of a few. A proper environmental assessment plan needs to be
carried out and proper reforestation plan should be drafted. Those farmers and fishermen who are
not displaced but affected by the VVDP project should also be compensated.

JUSTICE AND FAIRNESS

RESOLVING DISPUTES: Disputes among individuals in business, for example, when one
person accuses another of unjustly discriminating against him or her, showing unjust favoritism
towards someone else or not taking up a fair share of the burdens involved in some cooperative
venture are to be resolved. Resolving disputes like these requires that we compare and weigh the
conflicting claims of each of the parties and strike a balance between them. We are then said to
be just and fair. Justice and fairness are essentially comparative.

TYPES OF JUSTICE:

• DISRIBUTIVE JUSTICE- Just distribution of society’s benefits and burdens

• RETRIBUTIVE JUSTICE- Just imposition of punishments and penalties

• COMPENSATORY JUSTICE- Just compensation for wrongs and injuries

Business Ethics | Debojyoti Chakraborty, Roll No-14, IM-2 14

Distributive Justice: In the compensation offered, all 39000 displaced families are given the
same compensation package. But, there may be those who are better off and are foregoing more
than others. These people need to be given a right full compensation. However, from the point of
view of egalitarianism which holds that there are no relevant differences among people that can
justify unequal treatment; the same compensation for everyone is justified.

Compensatory Justice: The government could not fulfill the compensation it announced to the
1 million displaced people. Most of the displaced people received only house plots and low cash
compensation, and families were broken during the rehabilitation. So, from the point of view of
compensatory justice the VVDP is not ethical in its practices. A solution to the compensation of
the displaced people must be found before proceeding further in the project.

Business Ethics | Debojyoti Chakraborty, Roll No-14, IM-2 15