The Lookout of Corporate Social Responsibility in India – by Mayank Vats *

The evolution of Corporate Social Responsibility (CSR) in India refers to the changes over the period of time in the cultural norms of the corporates of India engaged in CSR activities. Companies are managed to have an overall positive impact on the communities, cultures, societies and environments in which they operate. The fundamentals of CSR are based on the fact that not only public policies but even companies should be sufficiently responsible for solving the social problems that are existent. Companies must face and look after the challenges and problems to some extent by the States. CSR is a management concept in which companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR is generally understood as to be the means by which a company achieves a balance between economic, environmental and social aspects in accordance with the expectations of shareholders and stakeholders. All that is beneficial to society can be called as CSR and such activities must be demonstrated by company on their website and company should take board approval for the same as well as for getting involved and the selection of CSR activities. CSR is an important element of development as companies need to ensure the well being of the communities which are in need of aid obliquely, especially those operating in rural areas. But, CSR also has an environment aspect that the company could influence depending on its operation. Many companies could have motivations to do CSR such as the genuine care of their environment and the society that eventually become their source of human capital and the raw materials they need. Also, some companies might see this as an important element of societal acceptance of their operations. This is really true for companies operating in remote areas, such as mining and oil and gas companies.

They are often met by many communities who live there and the businesses of the company must live and cooperate with those communities. Another aspect of CSR is that companies should see it as a voluntary action rather than something highly regulated. Because it’s something good for the company, it’s not something the company has to do because of the law or anything else. On the other hand, companies should not be forced to make CSR a compulsory action because once again, development actors are not just companies. It also includes government as well as civil society and the community itself.Under the Companies Act 2013, which replaced the previous legislation (Companies Act, 1956) which was nearly six decades old, the way the company operates and are regulated in India is looked after and its provisions specify that profitable businesses with a major business should spend annually at least 2 percent of the average three-year profit on CSR work. This would apply to companies with a turnover of Rs 1,000 crores and more, or a net worth of Rs 500 crores and more, or the net profit of Rs 5 crores and more. In accordance with new proposals, since early 2013-14, high-performance Public Sector Units (PSUs) such as ONGC, BHEL and NTPC may need to double their CSR spending in accordance with the new draft guidelines currently being finalized by the Public Enterprise Department (DPE). PSUs with net profit between Rs 100-500 crores are needed to affect 2-3% of their income. They must ensure that they spend the full amount planned for the CSR activities; otherwise they must disclose why they did not spend these funds. Public sector companies with a profit below Rs 100 crores are required to contribute 3% of their income to undertake such activities. The proposed guidelines state that if public sector units (PSUs) are unable to amount allocated to CSR for a given year, it must be spent over the next two years. These guidelines continue to exempt sick and deficit PSUs from budget allocation for CSR commitment activities.

Reference

*Mayank Vats – Symbiosis Law School, Hyderabad.

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