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CSR Not Mandatory in India, Govt Rules

| Thursday June 16th, 2011 | 0 Comments

India Inc. can finally breathe a sigh of relief because the government has ruled that CSR will not be made mandatory. Instead ‘flexible and directional guidelines’ will be issued. “There is no way the government wants to mandate it. If we make it mandatory there can be thousand and one ways to bypass it,” Corporate Affairs Secretary D. K. Mittal said at a meeting organised by the Bombay Chamber of Commerce and Industry on CSR.

The government would come out with ‘forward looking’ CSR spend guidelines, he said, “It will be only directional and not mandatory. We want it to be flexible. But once the new norms are in, firms will have to disclose their CSR spends or non-spending.”

“Like elsewhere, we want the new Companies Bill to include the CSR code and we want corporates to mandatorily disclose in their annual reports the codes which they adhere to or do not adhere to,” Mr. Mittal said. He added that the new bill would make the whole process more transparent. The new Companies Bill would be tabled in the monsoon session of the Parliament, towards the end of July. The 2% compulsory CSR spend proposal had sparked off an intense debate, with majority of corporates favouring voluntary CSR spend.

At the same event, Chief Election Commissioner S Y Qureshi talked about CSR and highlighted the “double standards” of the corporates who were “generous only when it comes to political donations, because there is a lot to be gained from that.” He also said corporate India has no right to complain about governance deficit or political corruption “when you don’t even bother to get out of your homes on a polling day.”

He went on to say that, “We need a Warren Buffet and Bill and Melinda Gates to teach our corporates on the need for CSR. What you do is not CSR but corporate social compulsion.” Finally he addressed companies saying that “CSR is not charity but a question of your very survival.”

The on-going debate of whether or not to make CSR mandatory has been going on for almost a year now. There have been several times when government officials have backtracked on the decisions. Now finally India has declared that CSR is not mandatory which means corporations can focus on ground-up, holisitc CSR initiatives that are not skewed towards charity.

That’s the hope anyway…


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