CSR In Times Of A Pandemic

Context: The government regulation over Corporate Social Responsibility has limited its outreach and efficacy. 

Various areas where CSR has been employed:

• Education: When the CSR provision was introduced in 2013 by United Progressive Alliance, CSR concerns were all about education.
• Women empowerment: Since “women’s empowerment” was also the flavour of the decade, savvy companies combined the two to focus on their CSR investments in educating women and the girl child.
• Building toilets: In 2014, the locus of corporate social concern appeared to switch to building toilets.
• Occasionally, “environmental sustainability” made an appearance

Tightening of Government regulation of the CSR in recent times:

• In 2019, government chose to view non-compliance of a provision that is essentially “comply or explain” in punitive terms, sending notices to companies that had not made CSR investments.
• In early 2021, the government doubled down on corporate requirements, imposing a fine of Rs 25 lakh for non-compliance.
• the Prime Minister’s Citizen Assistance and Relief in Emergency Situation fund, which conveniently abbreviates to PM-CARES, became eligible for CSR funding last year.

Issues with CSR funding:

• Limited by government definition: The impact of the many CSR activities did not materially bring about the transformational change they were supposed to.
  • For e.g. since 2014, From Maruti Suzuki to ONGC and NTPC, and even Boeing, hundreds of companies invested in building toilet infrastructure in villages and moffusil towns.
  • However, it did not materially change India’s record on open defecation.
• Question of aligning CSR to governmental priorities: As “causes” fall in and out of vogue, so do investments.
  • This is one reason CSR investments in education have fallen away even though India remains seriously starved of quality education.
  • The new CSR rules require assets created through CSR money to be transferred to the beneficiaries of the project, or a section 8 (not for profit) company or a public authority.
  • It is a fair bet that many facilities will be dismantled once the threat recedes, a massive waste of energy and resources in healthcare-poor India.

Way Forward: Instead of merely dumping an obligation on companies, it would be useful if the government worked on a model that enabled it to sweat those CSR assets in a redistributive partnership. For e.g.

• An oxygen plant or hospital hastily set up in Gurgaon could profitably be transferred to, say, Nuh.
• This would help over the long term in creating the more robust and equitable healthcare infrastructure that is critically absent in Indian today.