The industrial families of the 19th century were strongly inclined towards economic as well as social considerations.
CSR is a sense of responsibility towards the community and environment, both ecological and social, within which a business operates. The concept of CSR took several decades to develop. The present CSR concept is extremely complex. Although CSR is a product of capitalism, the concept has been socialized in India. The CSR concept in India has evolved in four phases. To enhance the knowledge of the readers, it is presented here:
First phase
In the pre-industrialization period, which lasted till the 1850s, wealthy merchants shared a part of their wealth with the wider society by way of building temples for a religious cause.
Moreover, these merchants helped the society in getting over phases of famine and epidemics by providing food from their storage and money, thus, securing an integral position in the society. With the arrival of colonial rule in India in the late 1850s, the approach toward CSR was modified. The industrial families of the 19th century were strongly inclined towards economic as well as social considerations and used to provide more for the welfare of society.
However, it has been observed that their efforts toward social as well as industrial development were not only driven by selfless, religious motives but also influenced by caste groups and political objectives.
Second Phase
In the second phase, during the independence movement, there was increased stress on Industrialists to demonstrate their dedication toward the progress of society. This was when Mahatma Gandhi introduced the notion of trusteeship, according to which the industry leaders had to manage their wealth to benefit the common man. “I desire to end capitalism almost, if not quite, as much as the most advanced socialist. But our methods differ. My theory of trusteeship is no make-shift, certainly no camouflage. I am confident that it will survive all other theories.”
These were Gandhi’s words that highlight his argument for his concept of trusteeship. Gandhi’s influence put pressure on various Industrialists to act toward building the nation and its socio-economic development. According to Gandhi, Indian companies were supposed to be the temples of modern India. Under his influence, businesses established trusts for schools and colleges and also helped in setting up training and scientific institutions. The operations of the trusts were largely in line with Gandhi’s reforms which sought to abolish untouchability and encourage the empowerment of women and rural development.
Third Phase
The third phase of CSR, around the 1960s, had its relation to the element of a mixed economy, the emergence of public sector undertakings (PSUs) and laws relating to labour and environmental standards. During this period, the private sector was forced to take a backseat. The public sector was seen as the prime mover of development. Due to the stringent legal rules and regulations surrounding the activities of the private sector, the period was described as an era of command and control. The policy of industrial licensing, high taxes, and restrictions on the private sector led to corporate malpractices.
This led to the enactment of legislation regarding corporate governance, labour and environmental issues. PSUs were set up by the state to ensure the suitable distribution of resources – wealth, food, etc. to the needy. However, the public sector was effective only to a certain limited extent.
This led to a shift of expectation from the public to the private sector and their active involvement in the socio-economic development of the country became necessary. In 1965, a group of academicians, politicians and businessmen set up a national workshop on CSR aimed at reconciliation. They emphasized transparency, social accountability and regular stakeholder dialogues. Despite such attempts, the concept of CSR failed to catch steam.
Fourth Phase
In the fourth phase, since the 1980s still, Companies had started abandoning their traditional engagement with CSR and integrating it into a sustainable business strategy.
In the1990s, the first initiation towards globalisation was undertaken. Controls and licensing systems were partly done away with which gave a boost to the economy, the signs of which are evident today. The increased growth momentum of the economy helped Indian companies grow rapidly and this made them more willing and able to contribute to a social cause. Globalisation has transformed India into an important destination in terms of production and manufacturing bases for MNCs. As Western markets are becoming concerned about labour and environmental standards in developing nations, companies in India which export and produce goods for developed countries, need to pay close attention to their compliance with global standards.
(Source: A case study – Source: Corporate social responsibility practices in Tamil Nadu Newsprint and Papers Limited (TNPL), Karur district, Tamil Nadu.)
