CSR Spending in India is to Go up by Rs 27,000 Crore per year

INDIACSR News Network

MUMBAI: “Learning by doing”, a workshop on CSR was organized first time in India at Mumbai recently. Organized by Institute of Corporate Affairs, Ministry of Corporate Affairs, Govt. of India in partnership with New Delhi based Greentech Foundation. The Hi Power Workshop was conducted by Dr. Bhaskar Chatterjee, IAS (Retd), Director General & CEO, Indian Institute of Corporate Affairs, Ministry Corporate Affairs, Government of India.

Addressing them Dr. Bhaskar Chatterjee said less than 1 per cent of corporate India actually has a board CSR Committee. 1 per cent of this 1 percent has a CSR Committee in which there is an Independent Director. The statistics are pathetic. But, this shows where the CSR stands on the Boardroom Agenda, he said. The New Companies Bill when it becomes an act mandates corporate world to constitute a CSR Committee comprised of 3 Board Members of which one has to be an Independent Director.

Dr. Bhaskar Chatterjee, Director General & CEO, Indian Institute of Corporate Affairs, presenting the new Indian legislation which is expected to become law sometime soon said. The bill, with 470 clauses, seeks to make CSR spending compulsory for companies having Rs. 5 crore or more profits in the last three years have to spend on CSR activities. The Lok Sabha debated over 8 hours on the subject and voted. Of which nearly 7 hours was debated on one section of the total 470 clauses. That is section 135 which makes corporate social responsibility (CSR) obligatory.

The new Companies Bill 2011 has proposed under Section 135 that every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.

This bill once voted in Rajya Sabha will become an Act. This will bring more corporates into CSR domain. Indian CSR must be Indian, observed Dr. Bhaskar Chatterjee. Corporates already have much good record of doing CSR activities. But, they do on and off. By bringing a mandatory legislation, government doesn’t want to be a moral police, he said and added that Corporates drive economic growth by and large of this nation. Our endeavor is to create an enabling environment by brining much of the existing energies of the corporate sector into CSR he said. It will provide a platform for companies to synergize their efforts. So far corporates have been doing CSR activities individually. Now we would like to bring Government, Corporate Sector and Civil Society together on a CSR platform for common growth. We don’t want to constrain corporate sector. We have provided in the bill the greater flexibility to them, he said.

To give a better understanding on the subject of CSR Dr. Chatterjee threw light on what is not CSR. Cheque-book charity where you give a cheque to a temple or an organisation and forget and think that your CSR activity is over is not CSR. Mere issuing cheques is not CSR, he said. Anything done to your employees is not CSR, it is a human resource activity. Anything done by volunteers of your organization cannot be counted as CSR. CSR must be conducted by professional implementation agencies. Any activity that is not a project is not CSR, the Project should have a starting date and an ending date. Mere monitoring or documenting with pictures of a program or activity is not CSR. And lastly that activity that has not been given board approval, passed by the board and does not have a board resolution number is not CSR. These are the six golden rules for the CSR activity to bear in mind he said.

The proposed Bill also lists the specific activities which qualify as CSR initiatives or programs. Take for example, eradicating extreme hunger and poverty, promoting education and gender equality, empowering women, reducing child mortality, improving maternal health, combating the human immunodeficiency virus and the acquired immune deficiency syndrome, malaria and other diseases.

Elaborating on these points as the time has come to shift gears when the companies Bill will become an Act and clarified the ambiguity on what is CSR. The CSR frame work of this country is changing rapidly, companies are setting up CSR Departments and Wings, he opined. Corporates must go beyond financial gains and must be accountable for social, economic and environment effects of their business.

What CSR means to western world is different from what it means to us. For us in India social development is more important. The ministry wants companies also to take part in the development of the society.

Projections are that it will increase CSR spending in India by Rs 27,000 crore per year.

The participants in the workshop opined that smart, structured CSR could play a key role in contributing to India’s development. India with population of over 1.2 billion, faces many challenges. Government is taking a proactive approach to involve companies in the quest for practical solutions in an effort to ensure that the whole population profits from economic growth. The government is in the process of passing the Companies Bill this year.

Considering the importance and need of the workshop, Greentech Foundation will organize more such workshops to impart knowledge of CSR concept, implementation and reporting to the corporates.

The workshop was overwhelmingly attended by large gathering from public sector and private sector, to name a few: ACC Limited, Adani Foundation, Ambuja Cement Foundation, Bank of India, Canara Bank, Birla Corpn Ltd., Cairn India, Central Coalfields Ltd., CPCL, CMPDI, Hindalco Industries Limited, ICICI Foundation, Indian Oil Corpn., Jammu & Kashmir Bank, Maruti Suzuki Limited, Jindal Steel & Power Ltd., Mecon Ltd., NHPC Ltd., NTPC Limited, NEEPCO, Northern Coalfields Ltd., Phillips Carbon Black Ltd., Reliance Industries Ltd., Tech Mahindra Foundation, Ultratech Cement Ltd.