Corporate Social (Ir)Responsibility in India – The true picture

In 2014, the government made it mandatory for companies to spend on Corporate Social Responsibility. India was the first and only nation in the world to do so. The amendment in the Companies Act stated that firms having a net worth of Rs 500 crore, or a turnover of Rs 100 crore, or a net profit of Rs 5 crore, will spend 2 per cent of their net profits on CSR.

The rule which faced initial backlash brought a rise in CSR spends by 47 per cent from 2014-15 to 2017-18 according to The CSR Journal. The KPMG India CSR Reporting Survey 2018 said, “This is a significant rise, clearly demonstrating higher expenditure towards CSR activities from the mandated year, 2014.”

The total CSR spending by top 100 companies in India from 2014-15 to 2017-18 is nearly 263.85 billion. This indicates a 29 per cent rise in the average amount spent by every company, taking it to Rs 761 million from 588 million in 2014-15.

The records, according to The Wire, indicate that the maximum spending in 2017-18 was on education (Rs 38.31 billion), health care, poverty, and hunger (Rs 24.85 billion) and environment sustainability (Rs 11.82 billion). Taking a deeper look, however, reveals an altogether different story.

While education, health care, and environment received a hike in CSR investments, child mortality was left empty-handed. The agenda of wiping out hunger was allocated only a 6 percent of the total amount. A sum of merely 0.38 billion is what technology incubators received in the 2017-18 division of money.

What comes as a surprise is the fact that an increase in the CSR funds has decreased the expenditure in numerous sectors. The money, which was supposedly allocated for the betterment of the Indian society, is actually being put to use for political agendas, the biggest and the most recent example being ‘The Statue of Unity’.

Conservation of national heritage is the section of CSR activities under which the 182-meter statue is said to be developed. Commenting on the project, Comptroller and Auditor General of India observed, “Contribution towards this project did not qualify as CSR activity as per schedule VII of the Companies Act 2013 as it was not a heritage asset.”

Another revelation is that a maximum of CSR spend has been done in developed states, including Maharashtra and Karnataka and Gujarat, which are amongst the topmost in India in terms of economic output. Making the rich states richer, there is certainly something fishy in the atmosphere.

KPMG, in its India CSR Reporting Survey 2017 also highlighted the notable difference in spends, in developed and developing states. “It is interesting to note that the six states, which house almost 60 percent backward districts of India, have received only 15 percent CSR fund, whereas five states, with about 15 percent concentration of backward districts, have received more than 70 percent CSR funds,” stated the report released in January this year.

The money coughed up for CSR by multiple companies can be a reflection of numerous agendas that satisfy both the parties, viz., the giver and the taker. Giving it a particular name (CSR) and using it with the intent of profit-making, might very well be possible. Unheard and uninformed, the spectators await the day when the money will be put to use where it should be. Till then, the nation is growing, biased and partially.

CSR and development
The development of a nation is its core competency. CSR is one of the pillars that dictate the onward path for growth, which in itself is a complex issue. Social causes and problems deep-seated in India can be turned around with the money being put at the right place. A strong and healthy community can only be birthed with transparency. Aiming for equality in quality, the right CSR practices can bring extension in the rate of growth currently being witnessed by the country. Proper resource allocation is key to the change India is waiting to witness.