Corporate India Wins, CSR will Remain Voluntary

By Suresh Kr Pramar

After holding out the threat of mandatory CSR for the past two years the Corporate Affairs Ministry has released a sugarcoated version of its thinking on responsible business. Corporate India has won. It has managed to ensure that CSR will not be mandatory.

The Ministry over the past two years, through its various spokesmen, including the Minister and the Secretary, had repeated stated that they were strongly in favour of making CSR mandatory as has been done in the case of Public Sector Undertakings. Within weeks of his taking over as the Minister incharge of Corporate Affairs Murali Deoras had publicly and said that it was mandatory for corporates to spend at least 2 percent of their net profits in the welfare of the society where they thrive.

Echoing this sentiment the Heavy Industries Minister Praful Patel has said the very purpose of mandating companies — both private and government-owned — is to deliver the benefits of overall economic progress which the country has made to the backward people. “It is not the government’s responsibility alone which can ensure change in our country…Corporate sector (should also help). I think the corporate sector cannot avoid the responsibility of bringing about change in our country and should support initiatives not only of the government but also outside the government,” Patel has said.

The Ministry’s change of direction is not surprising. Corporate India has a strong lobby to  work at various levels of the government. The Corporate India lobby floated the idea that mandatory CSR would affect the inflow of investments into India and lead to corruption. What these lobbyist forget that even countries like the USA and UK, as also many countries in Europe, have mandated some policy or programme on CSR. The U.S. has of late turned to legislating CSR for business:  in the regulation of health care, banking, and, sooner rather than later, offshore oil drilling.

Though India as a nation and Indians as a people are caring constantly moved by the plight of their unfortunate brethren CSR in the country still leaves much to be desired. Yes there are a few fine examples of good work being done such examples add up to a very small percentage of the total business community in the country.

Contrary to what the captains of industry would like us to believe Corporate India as a whole has not been as responsible or as caring as the people would like them. A few years ago the Governor of Andhra Pradesh E.S L Narasimhan jolted industrialist by pointing out that what they were contributing towards CSR was pitifully little.

Said the Governor “You get land for say Rs. 5,000 but earn a million out of it. Even if you pay the farmer Rs. 5,000 where he would only have got Rs. 500, you would still be making much much more. Tell us what part of your profits will you plough back. You are big guys, you think big, you talk big, you must do something big for us. Educating a few children as part of CSR is good but not enough. CSR should not be like planting saplings in the same patch of land every year, or even teaching the same set of kids”.

More recently the Chief Election Commissioner SY Qureshi came down heavily on corporate India regarding corporate social responsibility (CSR), saying that “CSR is not charity but a question of your very survival”.” We need a Warren Buffet and Bill and Melinda Gates to teach our corporates on the need for CSR. What you do is not CSR but corporate social compulsion,” Qureshi told a meet on CSR organised by Bombay Chamber of Commerce and Industry. “When it comes to charity, you corporates do not follow its basic principle (‘the left hand should not know what the right hand is doing’). On the contrary, you want huge publicity even if you build a public toilet.”

The credibility of the government as well as corporates to promote a CSR  is a little low. According to George Thomas, former Head Corporate Communications, SAIL “The government hasn’t come up with any credible action plan and firms are committing as little as 2 per cent of their profits to CSR.”

There is an uncalled for optimism among Ministry officials that the new policy will enable Corporate India to grow more responsible towards society. The Minister expressed the hope that these guideline will strengthen and enable the Indian corporate sector to evolve into a global leader in responsible business. Corporate Affairs Minister Murli Deora has expressed the view that the new policy will  strengthen and enable the Indian corporate sector to evolve into a global leader in responsible business. Minister for State R P N Singh has said “We are certain that the corporate world will do it voluntarily and we will not have to make it mandatory.”

There is a strong body of opinion in the country, including a majority among civil society organizations, who feel that Corporate India needs to be shackled with mandatory CSR provisions to ensure increased social responsibility among business. While the government has been harping on the theme of inclusive economic development it has done little to ensure that the benefits of economic development reaches the poorest of the poor.

Corporate India has the means to do much more to bring about inclusive development. Economic liberation has increased the tribe of the rich in the country while at the same time increasing the people below the poverty line. India has the third largest number of billionaires 69 who are collectively worth 280 billion dollars. Still, fourty-five of children below five years of age lack elementary healthcare and suffer with malnutrition.

Bradley Googins executive director emeritus of the Boston College Center for Corporate Citizenship and a professor of organizational studies at the Carroll School of Management, Boston College recently spent a month in India taing a close look at CSR as practiced in India. Says Googins CSR is developing quickly and broadly throughout India, reflecting its colonial roots in Great Britain but perhaps forgetting its more “hands-on” and “activist” expression in the Gandhian tradition.

“As you travel across India, you see stark contracts between the squalid slums of Calcutta and the glistening corporate edifices in HITEC (the Hyderabad Information Technology Engineering Consulting city) where multinational giants like Google and Microsoft compete alongside Indian powerhouses like Infosys and Wipro.   Companies that operate in HITEC pride themselves on embracing “international” standards of CSR. But there are paradoxes in being socially responsible in a nation as diverse and as poor as India.

“Gandhi demonstrated to the world the value of a principled life and introduced a leadership model where participation and engagement are essential to leading well.  The CSR world has a great deal to learn from the Gandhian emphasis on affordability and sustainability in the production and distribution of goods and services.   The Gandhian principles that can link CSR to business model innovation and to reaching the poorest of the poor.  That would go a long way to advancing the practice of a more vibrant and meaningful CSR across the globe.

(Suresh Kr Pramar is the Managing Trustee, Global Gandhian Trusteeship & Corporate Responsibility Foundation and the Executive Director, Centre for Training & Research in Responsible Business. He can be reached at