CORPORATE SOCIAL RESPONSIBILITY: ANALYSIS OF THE CURRENT LAWS By Avantika Singh from Amity University, Mumbai
It is very important that the companies are aware of the impact their business is creating the society through which they get the profits and it includes the environment as well. Corporate Social Responsibility (CSR) is a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders.[i] Sustainable development is a development that meets the current requirements of the business without hampering the ability of the future generation to meet their own needs. This means that there should be economic development without depletion of natural resources. CSR is an idea with numerous definitions and practices. The way it is comprehended and actualized varies extraordinarily for each organization and nation. Also, CSR is an extremely wide idea that tends to numerous and different points, for example, human rights, corporate administration, well-being and security, natural impacts, etc. The basic motive of CSR is to bring about changes through various initiatives and achieve remarkable sustainability. The consumers also expect that the companies should make profits and at the same time be responsible for their surrounding society and address the social and environmental issues.
India`s new Companies Act 2013 has presented a few new provisions which change the substance of Indian corporate business. One of such new provision is Corporate Social Responsibility (CSR). The idea of CSR lays on the philosophy of compromise. Organizations take assets as basic and crude materials, HR and so forth from the society. By performing the undertaking of CSR, the organizations are giving something back to the general public. Section 135 of the Companies Act provides the threshold limit for applicability of the CSR to a Company i.e. (a) net worth of the company to be Rs 500 crore or more; (b) turnover of the company to be Rs 1000 crore or more; (c) net profit of the company to be Rs 5 crore or more. Further, as per the CSR Rules, the provisions of CSR are not only applicable to Indian companies but also applicable to branch and project offices of a foreign company in India.
India is the first nation in the world to cherish “corporate giving” into law. Following an adjustment in Company law in April 2014, organizations with yearly incomes of more than 10 billion rupees must give away 2% of their net benefit to philanthropy. Areas, where they can put this cash, is coping with hunger, poverty, gender equality, empowering women, education, reducing child mortality, improving health, etc. while making this rule, the lawmakers were of the idea that it would help to bring out the much-needed money and funds for sustainable development. The outcomes on CSR expenditures by firms in the monetary year 2015-16 were discharged as of late. It is absolutely genuine that Indian firms all in all are more than following the CSR law. As indicated by Prime Database, Indian organizations burned through Rs. 9,309 crore on CSR projects in 2015-16, which was Rs. 163 crore more than the sum required by law, and Rs. 703 crore more than the earlier year.[ii]
This represents that the CSR is a success, but what is the truth?
The issue is that revealed consumption on CSR ventures does not represent a decent social welfare. These numbers exaggerate the impact of the law. It is dubious whether firms have genuinely extended their CSR spending after the law appeared differently in relation to what they were burning through purposefully under the watchful eye of the law, in light of the way that CSR spending was not especially pointed by point really. There is some evidence that while firms that were at first spending under 2% extended their CSR development, however, those that were at first spending more than 2% decreased their CSR utilize. CSR is a disputable thought with numerous administrators and authorities on both sides of the issue. In this way, it is not astounding that the Indian law does not unmistakably characterize CSR for the motivations behind consumptions. The law records just a few CSR exercises: poverty, promoting education and social business projects. This is excessively obscure, making it impossible to function as a lawful definition. It is not shocking that the law does not by any mean talk about and characterizes an implementation instrument or punishments for resistance. Thus, CSR seems to be contradictory. It may be difficult for the organizations to build excellent schools because the legal requirement can be achieved by spending the money on education.
There is inequality still prevalent in India and the CSR law was an effort to reduce it. This law, however, has not gone to the extent as it was required to go to. Without proper enforcement, it is far-fetched that the law will bring about across the board consistency and genuine viability.
[i] Financial Times Lexicon http://lexicon.ft.com/Term?term=corporate-social- responsibility-- (CSR) accessed on 8th July, 2017.
[ii] www.primedatabase.com, A Snapshot of CSR Spend in FY 2015-16, India CSR OUTLOOK Report 2016, pdf.
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