The creeping control that is mandatory CSR by Ravi Shanker Kapoor

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By Ravi Shanker Kapoor

village boy with indian flag
Village boy with indian flag

If there is one country where the worst fears of classical liberal philosophers, contemporary libertarians, and Western conservatives tend to be confirmed, it is India. The provision in the new Companies Bill to impose corporate social responsibility (CSR) on India Inc is one such exercise in dirigisme.

The attempt to make CSR mandatory is the epitome of illiberal welfarism, a thing no lover of human freedom can condone, let alone support. The first and foremost objection to the idea is that it represents the state’s brazen desire to control of one of the noblest of human instincts – philanthropy. The urge to help fellow human beings is as old as mankind. Over two-and-a-half millennia ago, Prince Siddhartha Gautam, moved by the sufferings of men and women around him, sacrificed all the pleasures and privileges that his royal status could bring to him and became Lord Buddha. He was certainly not responding to some fiat by his father to do so.

Similarly, those countless Europeans who gave up comfortable lives to serve humanity as Christian missionaries in Africa and Asia did not do so because of some government diktat. In the last century, a large number of rich youngsters in the West as well as in India became communists and socialists in the mistaken belief that their ideologies would make the world a better place. Many American tycoons have donated huge amounts to set up foundations and charities. Indian business houses have also done their bit. So, why should our government force big industry to become philanthropic?

Mandatory CSR is egregious not just because it introduces a pointless state intervention where none is needed, but also, and more so, because it attempts to control all that is personal and private to any individual – instincts, sentiments, munificence, genuine and spontaneous altruism. It enters the sacred space of the citizen and defiles its sanctity.

Khalil Gibran’s Prophet tells the people of Orphalese: “Your children are not your children.” In a similar vein, the Indian state tells businesspersons: “Your sentiments are not your sentiments. We’ll tell you what you should do with them.” Totalitarianism need not be the result of a violent revolution; the takeover of a society can also take place by way of a creeping acquisition.

This is exactly what is taking place. Our netas and babus want to tell corporate czars what should be done for the betterment of society. The very people who have messed up governance and vitiated every sphere of public life will frame rules and regulations for corporations’ philanthropic activities!

Corporate Affairs Minister Veerappa Moily said in an interview, “We have now taken a task to convince the corporate world… We have also said that disclosure is mandatory, but implementation is not mandatory.” Industry, however, has no reason to cheer because the government is unrelenting, and so is the army of professional revolutionaries. For it is the intellectual class that is responsible for a climate of opinion that helps our political masters chalk out policies to strangle business.

Thus, Moily said: “We have put in a schedule of the Bill on the activities they [corporations] should carry out. Now, we will have well-structured meetings… One meeting is with the PSUs… The next stage meeting is where we will discuss with the corporate world on what best they can do. There are as many as 300 most backward districts in the country…”

Now boardrooms will have to take a call not just on market share, corporate strategies, and financials but also the socio-economic conditions of the country. The focus has to shift from the interests of shareholders to the prospects of national development.

Numerous studies have blamed the diffusion of focus and mixing of objectives as one of the maladies afflicting public sector undertakings. The provision of mandatory CSR will surely infect the private sector with the same disease. Since the government will always be keen to tell companies “what best they can do”, politicians get an opportunity to influence and even coerce top executives to aid those non-government organisations and jholawallahs that serve political interests. Notice the preposterousness of the situation: India Inc would be forced to finance incorrigible Luddites and rabid radicals.

When rules and regulations are irrational, the sphere of discretion expands and sharp practice flourishes. It happened in the dark ages of the pre-liberalisation era; it happens today at all levels. Mandatory CSR will be a boon to the corrupt.

Politicians are not much interested in philanthropy. In the earlier years of the last decade, many successful professionals wanted to make huge contributions to their alma maters, such as the IITs and IIMs, but the government insisted that this could happen only through its own agency. It set up a fund, which had to be shut after some time because it got just Rs 1,651.

The quantum of CSR spend is not the issue; the ulterior motive is control of the economy. India Inc has to fight the growing influence of anti-business activists.

The author is a freelance journalist.

(Article first published in Business Standard)

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