The corporate sector through its corporate social responsibility (CSR) arm has the ability to provide mobile connectivity to 50,000 villages, says a report by the Federation of Indian Chambers of Commerce and Industry (FICCI) and consulting firm Accenture.
As per the Companies Act, 2013, most businesses are required to allocate 2 per cent of their profit for CSR activities.
According to estimates around 16,000 companies would spend about Rs.20,000 crore towards CSR activities in 2014-15.
“This (amount) equals to the Central Government’s total allocation to provide mobile connectivity to 50,000 villages, which wireless telephony has yet to touch. CSR budgets that stand to be unlocked this year tantamount to 80 per cent of the budgetary allocation towards fertilizer subsidy bill for 2014-15.
“Given that companies’ CSR spending will be pegged to their past three years net profit, the CSR budget nationwide will likely increase in the future,” the report says.
Opportunities for companies
“The new law presents several opportunities for companies to not only strengthen their CSR efforts but also shape India’s economic future and their own global competitiveness,” says the report, “Organizing for success on corporate responsibility: the path to high performance.”
New era of inclusive growth
In the report, Rajashree Birla, chairperson, FICCI’s CSR Committee, said that the Companies Act, 2013, heralded a new era of inclusive growth. “Even as many companies have been reaching out to the underprivileged since decades, there are several organisations that have not been engaged in the community development space,” she said.
According to Shaifalika Panda, co-chairperson, FICCI young leaders, the Act provides an opportunity for companies to move away from a narrow vision of CSR to a broader vision of ‘Corporate Responsibility’ (CR) comprising actions that will help create a people and planet-friendly business environment. “The board and senior management must take up the corporate social responsibility agenda and align it to business strategy,” Ms. Panda said. “In the short run, a large section of businesses in India will continue to focus on building their CSR muscle. At the same time, we strongly believe that they will embrace the CR paradigm, as they bridge capability gaps and gain experience on the way,” said Accenture Strategy India Managing Director Sanjay Dawar.
Keywords: Corporate social responsibility, CSR budgets, FICCI