Shower Experience, Not Just Money

Context: The main aim of the Corporate Social Responsibility (CSR) is to provide experience and knowledge rather than restricting itself to funding.

CSR: an institutional funding mechanism

• Quantum of funding: The Nifty100 companies cumulatively spent ?10,187 crores during 2019-20, based on the 2% of their average net profit computed on the basis of the past three years.
• Legality: CSR was introduced in 2014 through Companies Act 2013.
• Scope of usage:
  • CSR is mandatory for large companies to spend 2% of their net profit towards a list of causes.
  • CSR funds are used in Post-natural disaster relief work, construction of toilets, hygiene and sanitation at public monuments, championing of girls’ education and women empowerment, sponsorship of school midday meals, renovation of schools and hospitals, support to non-governmental organisations (NGOs) working in different areas of social work, etc.
  • As a source of funding for the government: to meet its any untoward exigency, E.g., CSR donations to PM Cares Fund to support COVID-19 related relief measures.
• Issues involved:
  • Turned from being a moral obligation of giving back to society to a compulsory one for India Inc.
  • Proposal to use CSR for vaccination of employees: may further reinforce the socioeconomic divide in healthcare delivery.
  • ‘Chequebook philanthropy’: writing donation cheques for funding relief work, instead of supporting long-term, sustainable community welfare projects.
  • Brings complacency in the long term: a readily available fund may tend to make the regional as well as central governments complacent about building strong public disaster management mechanisms.
• Way forward: Government should rope in companies-
  • To streamline disaster management systems.
  • To provide it with the expertise in choosing the right partners to work with.
  • In creating a better redressal mechanism for the public.
  • E.g. An IT company can help in digitalisation of government functions, or a hospital company can help in designing an effective public healthcare system.

Conclusion: Instead of leveraging corporate profits, the government should look at leveraging the companies’ experience of doing business to improve the delivery of public goods in the country.