It would have been quite stress-free for our country if the corporates had honestly and willingly taken steps towards social betterment. Post 1947, industrial growth has attained gigantic success helping the richer section become more affluent. Many of the Indian entrepreneurs find place in the list of mostprosperous personalities of the world; however the irony is thatthe slum area of Dharavi, Mumbai is among the five leadingslums around the globe (and poorest in the entire Asia), wherein more than 1 million Indians strive for food, water, and other basic necessities. The next fact would horror you. Maharashtra, an evil representative of wealth gap in India, sponsors the biggest slum of the world, with over 60 percent of population living in slum areas.
Now does this picture points out a fact that one of the most appalling curses of economy i.e. unequal income distribution is something that needs pressing responsiveness? Let us also discuss a few more facts about the Indian corporate sector. More than 1 million companies are registered with the Ministry of Corporate Affairs, wherein the private limited enterprises are almost 10 times in number as compared to public limited firms.As per the RBI, growth in gross profits of the Indian corporate sector was 22.2 percent during 1991-92 and 17 percent during 2000-2006. Herein, the most vital piece of information is that retention of profits enhanced at the rate of 10 percent during 1990s and further bounced to more than 60 percent during 2000-2006.
On the contrary, the rural parts of India and the dwellers thereinare on the verge of losing even what they have presently. Roads, schools, universities, toilets, environment, drinking water, and health are some of the concerns which seem endless and unrecoverable. The corporate sector, which largely depends on resources, be it the men, natural resources, production, or consumption from these rural parts, rarely care for thedevelopment of such areas. What kind of prosperity andopulence do people talk about when on one hand the riches sleep in centrally air-cooled bungalows, while on the other women in villages approach farms for bathing and defecating? Let me tell you that almost half of the Indians do not have access to lavatories.
Linking corporate success with the much-needed rural and social betterment is undeniably the most crucial work. A brave step was the addition of obligatory Corporate Social Responsibility norms in the new Companies Act 2013. Every company, be it private or public, surpassing the pre-determined limits of net worth/ turnover/ net profits, now has to contribute towards social advancement by setting aside at least 2 percent of average profits of preceding three financial years. Considerable to note,as per the CAG report five out of ten PSU’s did not apply even a penny on CSR ventures, though were required to do so under the law of the land for the FY 2011-12. Same is the case with private companies, which if not corrected, will serve no purpose.
I have formerly talked about setting up of a statutory body that should be entrusted with the task of applying CSR funds of thepublic sector companies to wellbeing programmes. Herein, private firms will also have to be encompassed. Either the government should add a new clause by which private players must be directed to credit the CSR fund to such statutory body, which in turn will make sure that the amount is applied timely and scrupulously to CSR events. Else, partnership of private firms and statutory body in the ratio 75:25 must be made a ruleso as to undertake quick CSR activities. Identification of workable CSR projects and outlay of funds should be capablyhandled by the statutory body comprising of skilled and proven specialists.
The new government at the center will have to rethink the current CSR norms with a view to permeating firm bindingeffect in the law. The Audit Report of CAG reveals the fact thatnone of the corporates, be it the PSUs or the private firms, are willing enough to undertake the social responsibility task. Tomake sure that the CSR fund, which would go as high as thousands of crores, is pooled and then utilized for actual social welfare, the MCA has to look forward to establishing a statutory body with autonomous members holding requisite expertise of running welfare programmes. Beyond assuring that the money is expeditiously spent on real ventures, the measure will also ensure that embezzlement of CSR fund by the corporates is curbed.