Date : 12 September 2013

Obligatory CSR: Making companies responsible for Government's functions.

Recently new Companies Bill 2013 is passed in the parliament replacing age old Companies law.
This is a good move by the government. But one particular provision of making spending on
CSR activities compulsory to companies is very unjust and absurd in its very nature. By
implementing CSR spending the government is gradually shifting its core responsibilities over to
companies. In alternate way it implies that it is parting away from its duties and forcing
companies to focus on non-core business activities. Why supposedly shift social responsibility on
companies because they are already carrying out social responsibility by giving jobs to people, in
which government has reasonably failed, the presence of large number of unemployed youth
corroborates this argument. The companies are doing this duty very well in spite of paying
requisite taxes and adhering strictly to numerous regulations and compliances imposed by
government. This recent compulsion on CSR spending is only an new addition to already
existing huge list of compliances. And the treatment the companies get from each government
official right from approval authorities to tax officials is so harsh and inconsiderate. As if they
are committing some offence by doing business.
While carrying out government's responsibility are companies going to receive considerate
treatment by all government authorities of which they truly deserve. Company has to spend
considerable amount to consultants in order to avoid any non compliances because they feel that
this spending is better than paying hefty fines arising from non compliances. Are tax officials
going to stop suspicious view towards companies? This new rule is total cowardness and a clear
depiction of self inefficiency on part of government in formulating proper policies and there
implementation framework. A subtle question here arises is - why should government collect
taxes if carrying out social work is company's responsibility. Then what is government's
responsibility?. Excluding defense, in what other way the payment of taxes helping companies.
Take for e.g. roads, nearly every single road in this country is filled with toll booths. Consider
education, why no one form middle class and upper middle class wants to educate there children
from municipality schools. Is government not responsible for giving conducive business
environment to companies. I doubt this because of the recent harsh policies of the government retrospective tax amendments, high pricing of communication bandwidths and 3G licenses ,
hoarding of coal reserves to itself and many more. The new rule will only add to the existing
agonies of companies.
I suspect if government is hiding its own lethargy and laziness . It is hypocritical to make
companies responsible towards society covering the fact - what responsibility is government
carrying out towards society. Why children are suffering from malnourishment in spite of
1

bumper harvest. Why are we importing coal and iron ore in spite of huge coal and iron ore
reserves? Why are youth unemployed in spite of securing degrees and diplomas? Take for e.g.
passing of powerful and efficient lokpal bill in parliament. It itself don't want to be answerable
but want others to be answerable towards their secondary functions.
The purpose of this article is not to demotivate CSR spending of companies neither to stop it. But
only raise genuine concern of companies that CSR spending should not be made compulsory.
Social responsibility is a collective responsibility of all citizens and not of companies alone.
Already many companies are spending chunk of their profits towards it. Why to enforce such
unrequired rules, creating a negative image in investor community. Such policing only depicts
government's harsh intentions. Why to clutter the minds of entrepreneur with excessive rules. It
only creates one more harsh regulation on companies.
My point is if government wants reason from companies if they fail to comply the minimum
CSR spending, is government ready to give reasons for its own failures in a clear and
understandable way. Because by the way CSR is company's secondary responsibility but social
responsibility is government's primary and most core function. Government is only boasting of
self claimed achievements of inclusive growth with its own unrealistic poverty reduction figures.
Further some ministers are justifying these claims by saying a individual can survive a day in 32
Rs only. A harsh joke on poverty. And if UPA or any party in that matter fails in two successive
periods of 5 years with what face it is again going among voters to ask for another chance in
each subsequent elections. Rather than pointing out silly mistakes of companies, the government
should focus on self introspection and be more efficient in its own functioning.
The need for Food Security Bill (FSB) is itself a shame on government. In spite of two
consecutive terms it has failed to keep its promises and it still feels that poor are unable to feed
themselves and so it is necessary to feed them. Thus contradicting its own claims of
achievements. Isn't this an grave failure of social responsibility that it failed to reduce poverty.
How many more years it will take to eradicate poverty. If social spending is made compulsory to
companies now , tomorrow government will make it compulsory to individuals and further it will
make compulsory to entire population but itself. What is the use of electing a government? If at
all CSR spending is a plausible compulsion then why give it name as social responsibility alone
give the name Corporate National Responsibility. Give entire responsibility of education, roads,
electricity, etc. to companies and close all the ministries related to it. Because any way they will
be reduced to watchdogs. And finally make defense of entire nation companies responsibility.
Then why to collect taxes if companies are themselves spending in these matters. Question arises
is government's function only to make laws and leave its implementation on companies. Slowly a
need will arise to give such names as Corporate Education Responsibility, Corporate Health
Responsibility, Corporate Police Responsibility, etc. for specialized spending by companies.
Honorable ministers, please consider this plea and avoid creating such absurd and unrealistic
rules and regulations on companies.
2

Do we elect government for diverging of their responsibilities to other entities or for accepting
the responsibilities themselves?
Sujeet Patil