CORPORATE SOCIAL RESPONSIBILITY
An edited
version of the following article appears in
Dignity
Dialogue, July 2013
as
star
letter
Corporate Social
Responsibility
M G WARRIER
The article “Corporate Ethics:
Preaching or practicing?” (Manu’s Musings, DD, April, 2013) was very informative
and thought provoking. On the one side we see the amended provision in the
Companies Act, 1956 stipulating a mandatory spend of 2% of corporate enterprise
profits. On the other side we hear about 105 billionaires having signed Warren
Buffet and Bill Gates’ Giving Pledge, promising to give away at least half
their wealth ‘back to the society’. There is some mismatch between preaching
and practicing, or philosophy and law. This article attempts to pick up some
loose ends. Further debate may lead to connecting some of them.
Last couple of years, media
reports show that corporate social responsibility (CSR) is gaining recognition
as a necessary feature of “being rich”. Examples of Buffet and Bill are being
emulated by ‘smaller’ entrepreneurs like P N C Menon in India , who are also declaring that
at least half of their wealth belongs to the society. Even the declaration by
individuals who own such wealth that they recognize the ultimate truth that
what they have is a “trusteeship right” to canalize resources in the right
direction, hopefully, will open a debate that will ultimately redefine CSR.
Spending on social
causes, by and large, has remained at the bottom end of priorities of the
government and corporations so far. Those rich individuals who have finally
started recognizing CSR as part of their way of life have done so either too
late, or because of “certain compelling circumstances in life” that they had
not bargained for. Without struggling to put together a legal definition for
CSR, those who are lucky to govern and manage resources that ultimately belong
to society should take on themselves the responsibility to alleviate poverty,
provide shelter and potable water, promote literacy and ensure reasonably
affordable health care. Menon had hogged the limelight in Guruvayur for
donating huge quantities of gold to Lord Vishnu, and one expected further
follow up of developments in the township in terms of provision of minimum
facilities like potable water and a reasonably acceptable waste management
system. But I was surprised to discover on a recent visit to Guruvayur that the
local middle-class population depended on free food served in temples, and used
the money saved to buy bottled drinking water at Rs 15 per litre.
The government’s and Corporates’
hesitant approach to CSR can turn out to be harmful to the country and in the
process to corporates also, in the long run. Spending for supporting social
causes, by and large, has remained at the bottom end of the priorities for
government and corporates so far. Those rich individuals from certain corporate
empires who have started recognizing CSR as part of their way of life have done
so either late in life or because of ‘certain compelling circumstances in life’
which they had not bargained for. Without struggling to put together a legal
definition for CSR, those who are lucky to govern and manage resources which
ultimately belong to the society should take on themselves the responsibility
to eradicate hunger and poverty, provide shelter and potable water, promote
literacy at least to the school level, ensure reasonably affordable healthcare
for those in the ‘command area’ of their governance or business/industry. Making
a mandatory provision in Companies Act to spend 2% of profit to meet CSR may
add to the corpus of PM’s Relief Fund from a captive source and may cover shame,
but will hardly ensure acceptable quick results.
A related issue is transparency in accounting wealth. There seems to be
a general impression that possession of ‘unaccounted’ wealth is just a
tax-related issue. High time, government, policy makers and analysts viewed
this from a social responsibility angle affecting the life and security of all
citizens including the rich, the middle class and the poor in different ways.
Inclusion of more columns in Income-tax Return forms( there is a recent
proposal in this regard) to ‘declare’ assets like cash-in-hand above
Rs50.000/-, ownership of vehicles and other movable assets may help to trap
some innocent individuals or even corporates who believe in transparency in
transactions and government may be able to collect ‘some’ extra tax from them.
If the effort has to yield results, first, the present holdings of movable
assets including gold, jewellery and other high-value assets held by
individuals, families, institutions including ‘charitable’ and religious
organisations will have to be ‘registered’ with some authority in a transparent
manner and a procedure to report periodically further accumulation to such
stocks put in place.
Based on his perception and information given to him, which he thought
correct, FM revealed in Budget Speech, 2013-14, that there are ‘only’ 42,800
persons in India who admitted to a taxable income exceeding Rs1 crore per year,
let us help him to take the issue forward. As privacy and secrecy issues will
prevent FM from giving out the names of these 42,800 persons, he should arrange
to prepare a district-wise list of these individuals and provide to each
District Magistrate/Collector the number (only the number) of rich people in
the respective districts who have annual income exceeding Rs1 crore. Collectors
should be asked to make ‘discreet’ enquiries and report ‘who’ these persons
could be and who all are likely ‘omissions’ in the list. Quite possible, GDP
may not grow at the expected growth rate, but, next year (2014), FM will be
able to give a decent six-digit figure against the 42,800 he included in the
current Budget Speech.
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