Chhattisgarh Mandates Corporate CSR Spending

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The Chhattisgarh government move goes against the very grain of the CSR concept followed all over the world. All definitions of CSR strongly stress on the fact that it is voluntary. Even in countries where statutory provisions have been made the selection of activities and their implementation is left with the company. Even in India the National Voluntary Guidelines on Social, Environmental and Economic Responsibility of Business speaks of CSR as a voluntary concept.

By Suresh Kr Pramar

Even while government and business debate on whether Corporate Social Responsibility in India should be voluntary or mandatory the Collector of Raigarh, Amit Kataria , has cast his vote in favour of making CSR mandatory. The Collector has set up a Monitoring Committee, composed entirely of bureaucrats, to decide the CSR activities each company will be allowed to carry out.

suresh kumar pramarOfficials say this step has been taken because industries are misusing or not fully utilising their CSR fund for social development. According to the District Collector “The committee in Raigarh had approved road building project besides other infrastructure development works in the district. The estimated cost of the projects was calculated at Rs 70 crore and would be incurred by the corporate houses having facilities in the area.”

Companies have been told that they have to submit their CSR plans to the district authorities for sanction before they start the implementation process. They will not be able to undertake community investments other than those sanctioned by the monitoring community. The district authorities will decide on the type of projects to be implemented and will, in some cases, undertake the implementation. Companies will have to deposit their CSR funds with the District authority.

The Collector’s initiative has won over Chief Minister Raman Singh. Endorsing the Raigrah Collector’s efforts the Chief Minister told a meeting recently that Companies based in Chhattisgarh will no longer be allowed to use their CSR funds on their own but will have to channelize the same through the district authorities. He said committees would be formed in each district under the leadership of District Collector. These committees will decide where and how to use the CSR money and in which project. Officials in the state claim that the state government’s new initiative is aimed to ensure full use of the fund earmarked by industries for the CSR.

The PHD Chamber of Commerce and industry ( PHD Chamber), Chhattisgarh Chapter, has welcomed the move and hoped that it would help the industry from facing allegation of misuse or non ulitisztion of fund most. Business houses in Chhattisgarh are opposed to the move. None of them are, however, prepared to voice their concern openly. One company official told this writer “if you want to swim in the ocean you cannot afford to take panga with the crocodile.” Company officials are afraid of openly opposing the move because they fear that the state/district administration will unleash the terror of inspector raj.

Opinion leaders in the state point out that industries in the state cannot afford to oppose the dictates of the state government officials. Almost all of them are involved in various underhand activities in full knowledge of the administration. These cover areas like land acquisition and manipulations of various types. Opposing the district/state authorities would lead to serious problems for their continued operations.

However silent opposition is growing. At a meeting of the State The Confederation of Indian Industry (CII) CSR Panel members expressed strong reservation on the move. It was pointed out that CSR was a voluntary commitment by business and it was the responsibility of the company to decide of the type of social investments they would like to undertake. One of the panel member pointed out that even the Corporate Affairs Minister Dr. M Veerappa Moily had said “Apart from certain guidelines for the Central Public Sector Enterprises (CPSEs), there are no mandatory guidelines or provisions for spending by Indian companies on CSR activities.”

The Chhattisgarh Government move goes against the very grain of the CSR concept followed all over the world. All definitions of CSR strongly stress on the fact that it is voluntary. Even in countries where statutory provisions have been made the selection of activities and their implementation is left with the company. Even in India the National Voluntary Guidelines on Social, Environmental and Economic Responsibility of Business speaks of CSR as a voluntary concept.

It is a common known fact that governments, central or state, are poor in implementing programme. Said an observer if state government were  efficient there would have been no need for corporate to step in and take up community welfare schemes. The need for corporate investments in the community has been promoted because business has the funds and the management know-how to manage and implement programmes. State government officials have neither the necessary skill, nor the inclination or the willingness to undertake community activities.

The state government’s efforts to directly control corporate CSR spend if likely to result in, what the late Rajiv Gandhi had said about, benefits not reaching the right people. It will lead to increased corruption and help bureaucrats to create hurdles for companies for their own individual benefit.  Planning Commission Member (Industry) Arun Maira has said, “Making CSR mandatory would be like asking a person to donate a certain amount in the temple and seeking pardon in return.”The Commission has said that “responsibilities of corporations towards society should be taken up on a voluntary basis, and aligned with best practices elsewhere in the world”.

The Government of Chhattisgarh should realize that CSR, to be effective and bring in benefits for the beneficiaries needs to carried out by people who have faith in their ability to do good. It is very often true that most bureaucrats do not have the feeling of public service. This writer is witness to the callous attitude of bureaucrats. Much of the suffering people of the district face today is the result of the collusion between the bureaucracy and business. I have witnessed the manner in which bureaucrats manipulated the system enable business to acquire large tracts of village lands.

Taking over the responsibilities of CSR is not the answer to business irresponsibility towards their CSR commitments. Whether good or bad company officials are aware of the special needs of the people in their impacted areas. Furthermore the responsibility of developing the infrastructure rests with the state government and should come out of government funds. Corporate spending should be to create better economic conditions for the poor and the needy.

Rusen Kumar, Editor, INDIACSR  has hit the nail on the head when he says, CSR fund should be used for socio-economic development where the companies operate. CSR funds could be effective tools for solving the problem of the society. Central and State have adequate funds to undertake infrastructure development.

Reference:

http://dprcg.gov.in/2163-22-08-12

http://hindi.business-standard.com/storypage.php?autono=62319

www.indiacsr.in

(Suresh Kr Pramar, Trainer, Writer,  CSR Consultant and the Executive Director, Centre for Training & Research in Responsible Business is a veteran journalist presently actively involved in promoting CSR through his publication CRBiz and by conducting workshop on Corporate Social Responsibility. He can be reached at suresh.pramar@gmail.com, sureshpramar@outlook.com Mobile No: 09213133042/9899305950)

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