Debating Corporate Social Responsibility

It is a known fact that the corporate sector in our country is a totally different world, alienated from its poor sibling – the rural India, in more ways than one can imagine. While the business fraternity is the torchbearer of the “India Shining” success story, complete with 8-9% annual growth and a booming Sensex; rural India is in fact its total opposite with malnourished kids, teenaged mothers, poor population and a backward environment. But what is shocking indeed is the total neglect and apathy shown by this ‘India’ towards the other ‘Bharat’.

What drives me to write so unfavourably about the corporate sector and the mentality driving it are the recent comments by Planning Commission head Mr.Montek Singh Ahluwalia on the side-lines of India-US high technology group meeting:

“There are certain proposals that you should introduce a legal requirement that companies should spend a certain percentage of their profits on CSR (Corporate Social Responsibility). I am not in favour of that”, Ahluwalia said here adding “that amounts to privatising taxation.”

He said if the government wanted it can increase the rate of corporate tax to 32% from the current 30% rather than making it mandatory for companies to spend 2% on CSR.

“If you want them to spend another 2%, that’s like saying that corporate tax would be raised to 32%…it is better to do that. You cannot have a corporate tax and then say spend another 2%.”

The companies Bill 2009, retains the provision of 2% of the average profit of the preceding three years for CSR responsibilities and has been heavily criticized by the industry. According to the proposal in the bill, every company having net worth of Rs 500 crore or more, or turnover of Rs 1000 crore or more or a net profit of Rs 5 crore or more during a year shall be required to formulate a CSR policy.” (PTI)
So, for a company which earns Rs 5 crore net profit during a year, it would be necessary to earmark 2% or Rs 10 lakh for CSR responsibilities. To Mr Ahluwalia, even such a paltry sum going for unprofitable purposes is intolerable.

Instead, he proposes that that 2% may be added to the corporate income tax as such a measure would amount to the same thing. The logic of such a reasoning is very clear to those who would have read Mr P. Sainath’s brilliant editorial in THE HINDU, titled CORPORATE SOCIALISM’s 2G ORGY. Some of the main points relating to this discussion are worth reproducing:

1. In six years from 2005-6, the government of India wrote off corporate income tax worth Rs 3,74,937 crore- more than twice the 2G fraud- in successive union budgets.

2. The nation presently writes off Rs 240 crore a day on average in corporate income tax. Oddly, that is also the daily average of illicit fun flows from India to foreign banks, according to a report of the Washington based think-tank, Global Financial Integrity.

3. That this figure does not include revenue foregone from higher exemption limits for wider sections of the public, senior citizens or women.

Looking at these facts, the reasoning of Mr Ahluwalia seems simple. Do not ask us to spend 2% separately on CSR but please do add it to the corporate income tax if you want to, because you and I both know too well that it is going to be written off at the end of the day. Also, please do provide us all kinds of incentives for looting the national exchequer year after year for our personal gains, but please, do not ask us to be responsible to the environment, our consumers, employees, stakeholders etc. Furthermore, do not again ask us to promote the public interest, as we are people secluded from it and who work proactively for our own selfish gains.

One of the main reasons why CSR is an anathema to the corporate sector is because of its shrill resonance with the sense of social justice. Here, the duty of giving back is not seen as a virtue, but as a vice, which should be gotten rid of as soon as possible. This, in turn, is a result of a profit driven mind-set which drives out all humane sentiments out of the purview of these hawks, and leaves only a deep imprint of the tips of weighing scale on their conscience.

Secondly, such an attitude is a result of a blatant refusal to take responsibility or recognize the inequality prevalent in the society by shifting the blame on either the structural imbalances or the deep rooted flaws as a result of decades of socialist practices. Perhaps such an attitude must have provoked the Supreme Court to remark in the judgement in Nalini Sunder and Others vs. The State of Chhattisgarh that the state had developed a “culture of unrestrained selfishness and greed spawned by modern neo-liberal economic ideology.”

Thirdly, such approach reeks of a lamb like faith in the trickledown effect, or the belief that the benefits of high economic growth cannot be restrained or directed towards a particular section of society and would eventually ‘trickle down’ to benefit all and sundry. The irony here is that these business tycoons want a windfall of profits and rapid business expansion for themselves in the least time possible but take the shelter of the trickle down argument when confronted with unprofitable schemes like CSR.
Such double standards aren’t newly developed practices, but are glaring signs of deep rooted prejudice that divorces the corporate sector from the rest of India. For us normal citizens, this should sound as a warning bell, for this is an indication that while the country had already gone to the dogs, the vultures have only now begun to descend.

Anshul Kumar Pandey

The author is a student of Zakir Husain College, University of Delhi pursuing graduation in Political Science. Apart from Politics, his areas of interest include short stories (fiction and non-fiction), travelling, photography and blogging. You can reach him at [email protected], or