By Rusen Kumar
The CSR Act in India is about to complete 8 years. In the year 2014, India adopted the concept of CSR with great enthusiasm. This concept has compelled capitalist society to look towards the social and economic problems of their present society. The spirit of cooperation among people is what drives the society forward.
As per Indian CSR law, corporate profit is a common asset. The amount spent by a company towards CSR cannot be claimed as business expenditure. How good it is that it has been readily accepted by the Indian capitalist society.
India is seen as a progressive society around the world. The diversity that India has is the basic feature of India. Diversity is what drives India to do more.
The CSR concept has made companies in India an acknowledged integral part of Indian society. The growing impact of this law has also made companies commit to socially good behavior. However, distributing a certain share of profit is not new to India. In our Puranic texts, as well as in modern times, there are many examples of this, where people not only dedicated their wealth but also their lives when needed.
According to the CRISIL analysis, Indian corporations have collectively invested Rs. 1 lakh crore for various social causes in just seven years after it was made mandatory.
Crisil report revealed that based on data disclosed in annual reports, pegs overall CSR spending in fiscal 2020 at Rs 21,231 crores, with 1,387 listed companies accounting for Rs. 14,431 crores (26% more than in fiscal 2019), and 19,962 unlisted ones Rs 6,800 crore (7% less than in fiscal 2019).
Covid-19 and Corporate Response
There is no doubt that the CSR Act has proved to be good for India. The importance of money in social progress cannot be underestimated in a free economy. How effective CSR can be has been thoroughly tested during the crisis of the Corona-19 pandemic. The kind of solidarity shown in the Indian corporate society has proved that the CSR law has been a successful system so far.
Any progressive society has to do two things – firstly, solidarity in times of crisis and secondly to contribute to great works. It is a good thing that the Indian CSR Act is seeing both the things happening.
Everyone in India believes in the spirit of being together. It was an opportunity to see this sentiment more closely during the crisis of COVID-19.
Due to the effect of this law, almost all the companies in India have made their own CSR policy. It is a different matter that lakhs of companies are still unable to understand the concept of CSR and they keep taking measures for procrastination.
Corporate contribution and CSR have contributed immensely in saving lives from COVID-19 in India.
According the a CRISIL report, in fiscal 2021, assuming the CSR spend was around the mandated mark of 2% of average profit of the preceding three fiscals, eligible companies would have spent Rs 22,000 crore on CSR, including Rs 14,986 crore by more than 1,700 listed ones and Rs 7,072 crore by unlisted entities.
According to official data submitted to Parliament, the Covid-19 pandemic affects the business function. India’s Corporate Social responsibility (CSR) spend for FY 2020-21 fell sharply to Rs. 8,828.11 crore, much lower than the cumulative spends of Rs. 20,150.27 crore in FY2018-19 and Rs. 24,688.66 crore in FY 2019-20.
Under the Act, CSR is a Board driven process and the Board of the company is empowered to plan, decide, execute and monitor CSR activities based on the recommendations of the CSR committee.
Way forward
We have to make such an impact in the society under CSR which can be seen, tested and measured. How bad is it that Indian companies still hesitate or remain indifferent to share their social contributions in society?
We are yet to see whether the CSR law will strengthen the profit-making spirit in the capitalist society in India or will strengthen the spirit of contributing more to solve the problems of the society.
According to the Ministry of Corporate Affairs Annual Report 2021, India has 13,34,119 active companies. How to sensitize more and more of these companies about CSR, Sustainability and ESG is a serious question.
In India, the CSR architecture is disclosure based and only CSR mandated companies are required to file details of CSR spent annually in the MCA-21 registry.
I believe that the success of any institution should be defined by the respect it receives in the society and the spirit of cooperation.
India still has a long way to go. There is a lot in India which is yet to be tapped. Due to illiteracy and poverty, the body of the Indian people is still malnourished and the mind is frustrated. It is our common responsibility to create opportunities for the people of the underprivileged society.
Crisis will keep on coming. Crisis never ends. We have to increase solidarity. We have to get closer to each other. We must cooperate on each other’s progress. We have to distribute more to get more. We need more people and more partnerships to do more. There is no harm in moving alone but it is not our aim to move forward only but it is necessary that we move together in the right direction.
We have to be motivated not to be greedy but to do good and worthwhile things.
About the Author
Rusen Kumar is the founder and CEO of India CSR – The CSR Informer of India. He regularly writes on CSR, Sustainability and Environmental affairs. He brings an understanding of governance, leadership development, social development, human development, and strategic focus by serving boards. His leadership accomplishments in social enterprise, planning, and governance range from viable achievements in knowledge forum initiatives to advancement of corporate social responsibility issues in India. He can be reached at rusenk@indiacsr.in
