INTRODUCTION:

The enactment of a new legislation in 2013 could be a turning point for Corporate Social Responsibility (CSR) activities in India. The new Companies Bill 2012, which will change the rules of governing, functioning as well as social responsibilities of corporate groups, has been passed in the Lok Sabha and Rajya Sabha. This bill makes it mandatory for companies of a certain size to spend 2% of their profits towards CSR activities. This landmark regulation could force many Indian companies to rethink their social activities since an analysis of CSR spend of the top 500 listed companies in India shows that most do not even spend 1% of their profits on CSR activities (CSR identity Report Card, 2012). Increasing this spending to the government recommended level, will in most cases, mean more than doubling of the CSR budgets. Some Indian companies are well positioned to move into the new paradigm due to their consistent focus on CSR activities over the years.

India could be the first country in the world to mandate an expenditure on CSR activities across the board. Some countries, like Malaysia, have mandated spending towards CSR for certain industries such as mining (Shah, 2013). The bill is bound to have serious implications on the corporate sector in India, since most companies have not dedicated resources for a sustained CSR activity. The proposed law mandates that all companies with revenue greater than Rs. 1000 Cr or profits of Rs. 5 Cr must spend 2% of the average of the last three years’ profits on CSR activities. The company board must designate a 3-member CSR committee to ratify decisions on spending and employee expenses will not be classifiable as CSR spending. Only UN Millennium Development Goals such as poverty alleviation, healthcare, education and social business ventures are considered as potential areas of investment (Shah, 2013). However, detractors warn that the Companies Bill could commit a big blunder by ignoring the sustainability of a CSR activity and enforcing corporate entities to take up only certain activities for their CSR spend (Kapoor, 2013).

In India, the services sector, especially banking, IT and BPO segments, has been in the forefront of CSR activities in the last two decades (Tewari, 2010). This study makes an attempt to understand the implications on the companies as well as the development of CSR if the new Companies Bill is implemented. This paper gathers insights from significant studies such as the 2012 CSR identity study of top 500 listed firms, Times Foundation study on CSR Practices in India and Karmayog’s annual CSR ratings.

Corporate philanthropy in post-independent India:

India has had a long tradition of corporate philanthropy and industrial welfare which have been put to practice since late 1800s. However, the last few decades of the twentieth century witnessed the corporate sector moving away from charity and traditional philanthropy towards more direct engagement in mainstream development and concern for disadvantaged groups in the society. Long before the advent of the Industrial revolution in India, the private corporate sector had witnessed businesses that were socially responsible to their various stakeholders; though the practices and the standard definitions of CSR were different in their nature.

According to researchers, the concept of voluntary action in social well being by corporate enterprises is an age old idea as the business itself (Vardarajan and Menon 1988). Sundar (2000), a philanthropy researcher, refers back to history and gives an account in detail about the philanthropic involvement of businesses in India against backdrop of the social, political, cultural and economic developments. First, technically speaking, philanthropy in the country is mostly a story of Indian businessmen as women historically did not play an important role. Second, the corporate philanthropy activity is more a story of indigenous businesses than that of foreign entities. Even though some overseas firms had major presence in India, their aim was to earn profits than focus on the country’s development. However, there were exceptions: some organisations that have been in India over a longer period of time and have become “Indianised”. Third, philanthropy was largely associated with traditional family businesses.

In India, corporate philanthropy is similar to that in the West as the idea was initially deeply based in beliefs of religious nature. Business practices that were socially responsible took different shapes: it could be to provide service to the community, promote religious conduct and beliefs, offer philanthropic donations to charity, or boost welfare of employees. Large companies provided funds to either charitable or educational organisations, promoting them as humanitarian deeds, but in fact they are simply trying to gain goodwill among the communities in which they operate. In 1950s, CSR was mainly based on a concept that it was an obligation of the business to society. During the early days after independence, there was hardly any documentation of such initiatives in the country. However, since then there has been a growing awareness to take up social activities internationally to boost their presence in the immediate environment (Shinde, 2005). Moreover, it is a proven fact that as companies shows genuine interest in socially responsible behaviour, public favour their services and goods (Gautam and Singh, 2010).

After India’s independence, J.R.D. Tata, the then chairman of the Tata Group made the pioneering effort in creating a socially responsible business model. Tata Iron and Steel Company was the first Indian company to set up an entire township for its workers complete with residential quarters, hospitals, schools, parks and other civic amenities. Similarly, in the public sector, Steel Authority of India Ltd built townships and ensured all employee benefits and civic amenities were available to its workers and their families as well. The first steel township built around the Rourkela Steel Plant in 1959 has been ranked 14th best city in terms of sanitation and cleanliness by the Union Urban Development Ministry in 2010. Apart from engaging itself in the production and marketing of steel, the company also has welfare schemes for its employees including housing, hospitals, schools, concessional transport, recreational and cultural activities, and canteen facilities (Madhavi, 2002).

According to the national survey on CSR practices in India carried out by TNS India in 2008 on behalf of Times Foundation, almost all the CSR activities in the private sector began after the year 1991 (TNS India, 2008). Nearly three-fifth of private companies in India initiated their CSR activities during the 1991-2005 period. Obviously the liberalisation of the Indian economy in the early 1990s had a significant role to play in stimulating CSR activities. Public sector units however, have had a much longer association with CSR beginning right from 1971. Social clubs such as Rotary Club and Lions Club played an important role in instilling a sense of social responsibility among Indian private businesses (TNS India, 2008).

Priority socio-economic areas considered under CSR initiatives:

Private firms in India take up diverse CSR activities such as in education, healthcare, sanitation, rural development, women empowerment and microcredit. Analysis of many survey findings reveal that although several firms have undertaken the universal language of CSR, most of these are primarily philanthropy, or just its extension (Gautam and Singh, 2010). Focusing on a particular social theme is now emerging as an important aspect of their CSR strategy.

FMCG companies in India such as Colgate-Palmolive, Godrej, ITC, Nestlé, Unilever, PandG have focused on CSR initiatives centred on women and children (Rana, 2013). Most of their activities are in areas such as community welfare, primary education, medical assistance, vocational training, adult literacy, micro credit, public social campaign, etc. Steel industry is associated with mining activities, which are mostly located in remote, underdeveloped parts of the country that are populated with tribal or uneducated people. Hence, the industry has a natural responsibility of taking care of the needs of the local communities and becoming a facilitator for social development and therefore, CSR has the most prominent role to play in such cases. The philanthropic activities taken up by steel and mining firms focus on family welfare, environment, health, cultural development, education, as well as constructing infrastructure such as water supplies, sanitation facilities and roads (Tewari, 2010).

The TNS India’s national survey found that education was the prominent social theme with 82% companies choosing it. This is in continuation with the historic preference made by Indian corporate houses right from pre-independence days. The Tatas setting up the Indian Institute of Science and Annamalai Chettiar founding the Annamalai University in Tamil Nadu in 1929 were the earliest examples of educational endowment (Wharton, 2011). Education was followed by health with 77%; environment with 66%; livelihood promotion with 57%; and women empowerment with 55% as the other areas presently focused under CSR initiatives. The proportion of private multinationals and PSUs taking up themes of microfinance and livelihood promotion are relatively very less The analysis shows that the CSR initiatives depends on several factors such as mandate of the organisation (54%), present relevance to the causes (51%) and demand and need (48%) of the community (TNS India, 2008).

Similarly, most Indian IT companies have chosen education as the most important theme for their CSR activities. Environment and waste management as an activity is gaining momentum under the blanket of responsibility towards the entire globe in response to the rising issue of global warming (Tewari, 2010). While education, environment, and healthcare are the most prominent CSR themes, microfinance is rapidly rising in prominence (TNS India, 2008).

In about 56% of the cases, people residing close to the organisation are covered under the CSR programmes. The other groups that are covered under these initiatives include the downtrodden population from rural locations (42%), tribal people (16%), and communities selected following consultations with NGOs (11%) and randomly picked communities (11%). PSUs’ CSR initiatives are undertaken to benefit communities staying close to the industry and rural population, while in case of the private sector, selection of communities are done following consultations with NGOs (non-governmental organisations).

Short-term and long-term CSR activities:

With so much of confusion about what constitutes a short-term or a long-term CSR activity, there is no definite definition of the term. It may be defined by looking at its dual aims — the benefit offered to firms and communities, and the kind of potential benefits in each of these cases (Keys et al, 2009). Several firms undertake CSR activities that can be called ‘pet charity projects’, as they only indicate the personal interests of the senior executives in the management. Although such activities may be showcased with enthusiasm, they provide minimal benefits to both the firms and communities. For example, donations from the corporate enterprises confer the majority of benefits on society, though it is questionable about the benefits to the firms. Similarly, CSR activities are primarily focus on building a company’s reputation and little focus is paid to the real benefits offered to the society. According to cynics, this form of CSR takes up the role of advertisement and it could be dangerous, if there is a gap between the company’s propaganda and ground realities (Keys et al, 2009).

Mckinsey’s CSR Landscape Model:

Short-term CSR activities such as one-time donations to disaster victims, felicitating sportsmen for achievement, donating school kit for deprived children were some of the regular activities conducted by Indian companies. While companies spend a sizeable amount on these short-term CSR activities, but soon they realised that their impact wears out pretty fast. A hodgepodge of uncoordinated CSR and philanthropic activities disconnected from the company’s strategy will neither make any meaningful social impact nor strengthen the firm’s long-term competitiveness (Porter and Kramer, 2006). Concentrated activities over the last decade indicate that a long-term focus is emerging Indian corporate enterprises. The annual Karmayog CSR Ratings given for India's Largest 500 Companies indicates that spending on CSR has steadily increased over the 2007-2010 period.

Karmayog CSR Ratings found that the number of companies that do not indicate any CSR spending in their annual reports (Level 0 firms) has rapidly fallen from 221 companies in 2007 to 113 companies in 2010. The number of companies that have initiated a CSR program and dedicated budget (Level 1 firms) has steadily increased from 93 in 2007 to 148 in 2010. Similarly, there has been a steady rise in the number of Level 2 and 3 companies, who have been running a long-term focused CSR program. However, the number of Level 4 companies has stagnated and there has been no company rated with Level 5 CSR activity. This indicates that while there is a rapid expansion in the scope of CSR activity, they are far from reaching a level of maturity (Karmayog, 2010).

Karmayog CSR Ratings expects a company to spend at least a minimum of 0.2% of its profit after tax on CSR activities. Well defined expenditure on CSR has been shown by very few companies, which are rated Level 3 and above. However, most of the companies did not mention the amount spent in any of their balance sheets or annual reports. Several firm take up their CSR activities in an short term manner, not related or integrated with their businesses and disperse the funds in several activities, which ultimately erodes the focus of the main idea. Most often, either the companies are unaware or don’t bother. However, still there is an upward learning curve for all companies on this aspect. The overall approach to CSR is driven by philanthropy than connecting it with business as in the West (Gautam and Singh, 2010).

CSR focus areas and business linkage of Indian companies:

India being a developing country with numerous socio-economic problems to deal with, private companies have a plethora of issues to choose from. Diverse issues such as healthcare, education, rural development, sanitation, microcredit, women empowerment, etc., are chosen for carrying out CSR activities across India. While some companies consider their interaction with stakeholders and impact of its business on society as significant for choosing issues, most of them work in various social issues simultaneously. Among them education is the most prominent with almost all Indian companies having some focus on this theme. A survey by TNS India indicated that 82% of companies chose to work in primary and higher education, healthcare stood second with 77% companies choosing it. Environment (66%), livelihood promotion (57%) and women empowerment (55%) were the major thrust areas currently covered under various CSR initiatives (TNS India, 2008).

There is a debate about whether to have a CSR initiative well integrated into a company’s model or it should deal with a social issue without any connection to a company’s main business activity (Lys, et al., 2013). Some believe that CSR projects with a direct link to a company’s business are sustainable, since they can be measured and their output encourages companies to invest further in these social programs (Kapoor, 2013). While most of the CSR programmes run by FMCG companies in India have a long term vision on societal change and upliftment of the poor, some of these are considered as marketing tools of corporate entities. Some of these CSR programmes do have a direct or indirect connection of the company’s main business activity. The following examples are illustrative –

· Colgate-Palmolive India’s oral health awareness activity through its School Dental Health Education Program

· Unilever’s Shakti micro-enterprise programme that creates opportunities for women to sell a range of affordable products in rural areas

· Nestlé’s Healthy Kids Programme focuses on providing nutrition education to adolescents

· PandG's Parivartan – The Whisper School Programme helps adolescent girls adopt the right feminine hygiene practices

· Tata Tea’s Jaagore campaign focuses disseminating a social public message on civic rights, women empowerment, etc.

· ITC’s e-Choupal initiative attempts to eliminate intermediaries and help fragmented farmers

Companies in other industries such as banking, IT, engineering choose a social theme that is not connected to their business. Spending such CSR activity does not directly help build their business activities. For instance, Deshpande Foundation deals with integrated rural development, Azim Premji Foundation focuses on child education, while Indian Oil Corporation works on cultural heritage conservation. Meanwhile Karmayog CSR Ratings found that around 26 companies have reported environmental activities such as energy efficiency and waste management as CSR.

While each company can define its own path for its CSR initiative, both the government mandate and international guidelines are specific about the choice. As per the new Companies Bill, companies are mandated to commit their CSR activities in the areas covered by UN Millennium Development Goals such as eradication of extreme poverty and hunger, achieving universal primary education, promotion of gender equality, reduction in child mortality, improvement in maternal health, etc.

Current CSR activities undertaken by Indian companies:

Typically, any kind of philanthropic activity by corporate companies is looked at contemptuously. Journalist P Sainath dismisses Indian CSR programs as a marketing tool of corporate entities. His assessment of NGOs in India is even harsher as he alleges that as many as 70% NGOs are either tax shelters or tools for corporate market research (Kaye, 2013). However, this accusation of a hidden business motive has not tainted all CSR activities by Indian companies due to two main reasons. Many of these companies take up activities such as child education, poverty alleviation, healthcare, etc, which are not directly linked to their business activities. Activities such as integrated rural development by Deshpande Foundation, child education by Azim Premji Foundation, sports scholarship by Tata Steel are good examples for CSR changing the perception on Indian companies.

The second major reason for the philanthropic involvement of Indian services companies is that the industry does have a high stake in sustaining and building a healthy, cosmopolitan culture to attract the best talent available in the market (Jatana and Crowther, 2007). However, a 2012 study conducted by CSR identity in association with the Forbes India Magazine revealed some interesting facts. Despite the hype about consistent CSR spending by Indian companies, actual figures show that they fall way behind the 2% profits after tax (PAT) mandate suggested by the new Companies Bill. The study by CSR identity considered the revenues and PAT figures of the top 100 companies during the Financial Year 2011-12. Based on that, the actual spend indicated by various companies stood at an average of Rs. 32.09 crore per company, while the 2% PAT mandate turns out to be Rs. 61.84 crore! It is clear that despite the decent CSR spend indicated, companies have to double their spending in order to catch with the mandated figure (CSR identity, 2012). Tata Steel stands as a stalwart among top 100 companies with a Rs. 146 crore spent on CSR in FY2012 as compared to the mandated Rs. 78 crore. Similarly, Jindal Steel and Power has spent Rs. 88 crore on CSR in FY2012 as compared to the mandated Rs. 76 crore. Apart from these two companies, there are a few other companies that spend cross 100% of the mandated figure. They are: Jaiprakash Associates, Hindustan Petroleum Corp, Jindal Steel and Power, JSW Steel and MMTC, which have spent anywhere between Rs.3 crore to Rs. 88 crore in FY2012 (CSR identity, 2012).

Surprisingly, the regular CSR award winning companies and other new economy companies that have built a reputation in corporate philanthropy in India are not prominently visible in this list. For instance, some winners of Businessworld FICCI CSR Corporate Citizen Award winners such as Tata Steel, SAIL, ITC, MSPL are noticeable in the list of the top 15 companies in the CSR identity study (FICCI, 2011). However, others like Bharti Airtel, Neyveli Lignite Corporation, Zensar Technologies are not visible. Similarly, new economy companies such as TCS, Infosys, Wipro, Cognizant, Reliance Communications who are listed among the best employers in India, do not feature in the top CSR spenders.

The reason for this anomaly can be found if we categorize the industry sectors of the major CSR spenders listed in the CSR identity study. Incidentally, all the top 15 spenders come from either mining, energy or manufacturing industries, where there is large scale utilization of natural resources such as coal, oil, iron ore, etc. So when these companies expand their manufacturing or mining operations, they need to give large scale compensation for the rehabilitation of the displaced people. Similarly, they have to allocate a large budget for reforestation, pollution control, effluent treatment facilities and other sustainable business practices. Since these companies include such expenses under CSR activities, their CSR spend seems to be much higher than others.

Table 1: Leading CSR spenders among top 100 Indian companies:

Company (Figures in Rs. Cr)	Revenue	Avg. PAT	Actual Spend	2% of PAT	Difference
Tata Steel	135,976	3,895	146	78	187%
Jaiprakash Associates	15,651	1,396	47	28	168%
Hindustan Petroleum Corp	195,891	1,118	27	22	123%
Jindal Steel and Power	22,473	3,184	88	76	116%
JSW Steel	36,964	1,569	32	31	103%
MMTC	67,023	129	3	3	100%
Oil India	17,215	2,988	50	60	83%
Hero Motocorp	25,235	2,179	33	44	75%
Larsen and Toubro	64,960	4,818	70	96	73%
Gail (India)	44,861	3,891	54	78	69%
Reliance Industries	368,571	21,138	288	423	68%
Steel Authority of India Ltd	51,428	5,153	61	103	59%
Indian Oil Corporation	442,459	7,783	83	156	53%
Coal India	78,410	11,759	119	235	51%

Source: Forbes India - CSR Identity Report Card, 2012

This anomaly is addressed in another set of data compiled by the Assocham Eco Pulse study on CSR by Indian companies in 2009. This study found that FMCG and Chemical sectors are the leaders in terms of number of CSR initiatives. Chemical companies led with 12.11% share of CSR activities in environment and education areas. FMCG companies stood a close second with 10.15% share of CSR activities in community welfare and education. Textiles and IT sectors followed next with 8.5% share in the number of initiatives. While leading sectors in CSR spend such as oil and gas, metal and mining lag behind in the 10th and 11th positions. This variance in data clearly indicates that a company’s CSR spend itself does not depict the ground reality about its actual CSR activities.

Increasing focus towards CSR activities and higher concentration on specific themes indicate that Indian corporate enterprises have realised the value of returning their profits to disadvantaged sections in the society will significantly help in building their reputation and customer base. Both shareholders and stakeholders of a company are increasingly playing a key role in bridging the gap between compliance and responsive behaviour. In the new market economics, the financial market is being evaluated on the basis of the CSR aspect attributed to the financial proposals received (Reddy, 2010).

Table 2: Leading sectors in number of CSR initiatives:

Rank	Sectors active in CSR areas	Share (%)
1	Chemicals	12.11
2	FMCG and Consumer Durables	10.15
3	Textiles	8.67
4	Software and ITES	8.18
5	Construction	8.02
6	Cement	7.86
7	Power	7.86
8	Engineering	7.36
9	Fertilisers	5.89
10	Oil and Gas	5.56
11	Metal	4.42
12	Automobiles	4.09
13	Logistics	3.6
14	Telecommunications	2.29
15	Media and Entertainment	1.15
16	Computer Hardware	1.15
17	Jewellery	0.82
18	Retailing	0.82
	Total	100%

Source: Assocham Eco Pulse, 2009

Implications of the new Companies Bill 2012:

The new Companies Bill 2012, which will change the rules of governing, functioning as well as social responsibilities of corporate enterprises in India, has been passed in the Lok Sabha and Rajya Sabha. While there are various contentious issues in this new bill, the most controversial among all has been the mandatory CSR spending clause.

Clause No.135 in the Companies Bill 2012 states that every company with a net worth of Rs 500 crore or an annual turnover of Rs 1,000 crore or a net profit of Rs 5 crore has to create a CSR committee, of which at least one director must be independent. The Board of every company shall ensure that the company spends in every financial year, at least 2% of its annual average net profits made during the three preceding financial years. Information about the implementation of the CSR policy has to be published in the annual report and displayed on the company website as well (Companies Bill, 2012). If the company fails to spend such amount, the board shall specify the reasons for not spending the amount. However, the bill does not specify any penalty or legal implications for not adhering to the 2% CSR mandate (Dubey, 2012). Some of the possible implications expected as the outcome of the bill if implemented are given below.

1. Massive inflow of CSR funds may cause ripple effects:

As mentioned earlier, the actual CSR spend indicated by various companies stood at an average of Rs. 32.09 crore per company during the Financial Year 2011-12, while the 2% PAT mandate turns out to be Rs. 61.84 crore (CSR identity, 2012). According to an estimate, if all the Indian companies with a net profit of Rs 5 crore dedicate 2% of their PAT on CSR activities, it will open up nearly Rs. 25,000 crore worth of funds (Shah, 2013). In a more realistic sense, the top 1,000 publicly-listed companies are expected to dedicate sizeable amount of their PAT on CSR activities, which may or may not match their 2% mandate. Going by the government’s 2% norm, around Rs 6,300 crore is expected to flow in from India’s top 500 listed companies (Bapat, 2013). Either way, corporate spending on CSR activities is bound to increase drastically in the coming years.

2. Induction of dedicated CSR department in each corporate company

Typically, in any Indian company, the CSR activity is handled by the human resources or the corporate communications department. These managers tend to split their time between CSR and other corporate responsibilities, which hinders them from focusing on sustained CSR activity. Most of the CSR activities in India tend to be ad-hoc activities that are either managed by an NGO or by an external PR agency. Evidently, there is widespread lack of commitment for the strategic aspects of CSR (Karim et al., 2012). Further, another serious issue with CSR practices is that companies usually don’t have a CSR strategy, but rather numerous disparate CSR programmes and initiatives being managed across the country. Some CSR programmes will lend themselves to the company’s core business strategy, but many others will not. Instead of attempting to weave them all together, it is better to bring some discipline and structure to the many fragmented components of CSR (Karim et al., 2012). The new Companies Bill’s stipulation of constituting a CSR committee made up of three or more board of directors surely provides some direction in the creation of a dedicated CSR department and a strategy.

Establishing a dedicated CSR wing is bound to increase the number of people employed specifically for CSR activities. Since corporate executives lack the knowledge of managing social sector activities, more number of Master in Social Work graduates would be employed by private companies as field officers. Their role will be similar to agriculture graduates who are employed by banks as field officers to study the farming sector and advise on loan distribution. When it comes to engaging with communities, corporate enterprises often underplay the strength of their biggest asset – their employees. Employees, who regularly volunteer among various NGOs can be utilised to coordinate and implement various CSR activities (Bapat, 2013).

3. Need for setting up a an CSR Authority

The huge corpus of funds that would be available for CSR spending as well as the fact that the spending would become mandatory for many companies, there would be a need to set up a CSR authority do the various functions like:

· To evolve and create new ways to effectively use CSR funds for comprehensive social upliftment.

· To co-ordinate and synergize activities of various companies and intermediaries like NGOS

· To audit and prevent malpractices like Paper CSR

· 4. Drastic increase in budget will lead to higher NGO accountability

The CSR mandate raises a big question in the minds of the corporate enterprises: are non-profitable organisations really capable of absorbing the huge capital inflow estimated at $5 billion in the right way? In spite of the 3 million NGOs that exist in India, there is a popular perception that many are inefficient and disorganized. This new capital will call for quick scaling of systems and processes by the sector. While not in print, the subtext seems to suggest that the government wants Indian corporations to not just fund, but also prepare social enterprises for scale and sustainability (Shah, 2013).

NGO accountability is a highly contentious issue and a key complaint against Indian NGOs is their overspending on overheads. According to NGO watchdogs, almost half of the funds are misused, mostly for supporting high administrative costs of running organisations. While NGOs who raise Indian funds are accountable to the Indian public and corporate entities, there is no accountability for funds taken from foreign donors who are abroad. A government report on utilisation of foreign funds by Indian NGOs showed that out of the total $2.15 billion in foreign aid received in 2008, around $680 million was used for organisational expenses. While groups like Credibility Alliance, iCongo and GiveIndia are working towards increasing NGO accountability through annual reviews and accreditation, they still have a long way to go (Bhowmick, 2010). There are other uncomfortable issues such as businesses using NGOs for money laundering, which calls the credibility of a lot of Indian NGOs into question.

Why CSR is a must?

Dubey presents three main reasons why Indian corporate enterprises must take up CSR obligations regardless of the CSR mandate becomes a law or not –

· Legislated CSR mandate is becoming an acceptable norm across the globe, with disclosure on environmental, employee, social and community matters becoming part of triple bottom-line reporting. So India and other emerging countries will follow suit.

· Disgruntlement among the masses is becoming widespread, right from the Naxalite movement in the jungles to the trade unions killing factory managers. Every bit of work done to reduce this frustration will help create a better society for business to flourish.

· The Indian government has abdicated a great many sovereign functions, leave alone the directive principles of state policy. If the government has not discharge its basic duty to its citizens, that provides a great opportunity for the corporate citizen to step in and present a better alternative of a well-managed capitalistic market caring for the society as compared a socialistic bureaucratic machinery which is not even providing the promised subsidies.

· CSR obligations take companies out of their zones of core competence, which is to make money and more money. It comes down to what we think companies are here to do: just make money for shareholders, or serve a wider public interest. The law doesn’t seem to agree with this narrow view (Dubey, 2012).

CONCLUSION:

The passage of the act is definitely a great step in ensuring that there is greater commitment from corporate towards CSR. While it shall lead to a huge fund inflow into CSR activities, it is quintessential that necessary CSR infrastructure to be built on a war footing to utilize the additional resources effectively and efficiently. It is also pertinent that an appropriate monitoring body like a CSR authority on the lines of IRDA should be established to effectively synergize the CSR effort by various companies, NGOS and other intermediaries to extract as well ensure quantum leap in the benefits accrued to the society. It is important to note that the act does not specify any punitive clauses for not adhering to the mandate which makes it more important to have a CSR monitoring body to prevent creative accounting and show adherence to CSR mandate only on paper. While the passage of the act would have a positive impact on the CSR efforts in India, it also calls for efforts to amend the act so as to include punitive clauses for not adhering to the CSR mandate but also have declare special sops for companies who adhere to the same to make it more effective and consequential.

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Received on 16.08.2013 Modified on 01.09.2013

Asian J. Management 4(4): October –December, 2013 page 317-324