CSR PatchWork

By: |
January 21, 2016 1:03 AM

Data from new report shows CSR becoming a substitute for poor governance, a shadow tax on India Inc

A report by CRISIL Foundation on corporate social responsibility (CSR) spending in India in FY15 gives away how CSR is increasingly becoming the putty to fill in the holes in governance. Nearly 75% of the spending accounted for in the report was in three sectors: education & skilling, healthcare & sanitation and rural development—all sectors where, given the social spending of the government over the years, there should have been very little room or need for CSR. As per the report, nearly 1,000 listed companies—out of the 1,300 (of a total pool of 3,855)—that met the mandatory CSR spending stipulation of the Companies Act 2013, together spent nearly R6,800 crore. Though, at 1.35% of their total profits, the spending was short of the 2% mark set by the Companies Act, the amount is not an insignificant one—for perspective, it was a fifth of the budget allocation for the rural employment guarantee scheme for FY15.

The report holds that CSR spending getting concentrated reflects the greater availability of scale and capacity of NGOs in these areas—otherwise, why would technology development/incubation centres get only

R 15 crore, given industry stands to gain more from spending here? However, the mushrooming of NGOs in education, healthcare and rural development exposes the gaps fostered by the poor performance of the government, which, in turn, betrays the inefficient spending of the huge sums poured in. The backdrop makes CSR look like a remedy for governance deficit—and the fact that it is mandatory makes it look like a shadow tax on India Inc.

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