There is an ongoing debate on whether CSR (Corporate Social Responsibility) be made compulsory for companies, considering the fact that the government is planning to introduce it in Companies bill,2009 which will be presented in the parliament during the budget session coming up. The government, the ministry of corporate affairs, the companies are all part of this discussion.
First let us look at what is CSR?. CSR act mandates that companies having net worth of more than Rs 500 crores or having turn over more than Rs 1000 per year or those have net profit above Rs 5 crore per year should invest 2% of their net profit for social activities.
There was a possibility that this act would get diluted because the companies want the "mandatory" part of the bill to be removed.
Few companies such as ITC, Dabur etc have already taken up this responsibility and embraced. The ITC's echaupal scheme is an excellent example.
There are several ambiguities in the bill, - one of them being that it does not state where exactly the companies should spend this amount. It will be best for the companies if they spend on social activities related to their day-to-day activities. For e.g Dabur is spending on sustainable cultivation for herbal products.
While the companies become aware of this, and take up more of such activities volunterily, they should not be coerced to do so, even though Minister for corporate affairs, Murali Deora, spoke about make it compulsory recently. It may have to do with the typical indian mentality of not doing something good unless it is being compulsory.
First let us look at what is CSR?. CSR act mandates that companies having net worth of more than Rs 500 crores or having turn over more than Rs 1000 per year or those have net profit above Rs 5 crore per year should invest 2% of their net profit for social activities.
There was a possibility that this act would get diluted because the companies want the "mandatory" part of the bill to be removed.
Few companies such as ITC, Dabur etc have already taken up this responsibility and embraced. The ITC's echaupal scheme is an excellent example.
There are several ambiguities in the bill, - one of them being that it does not state where exactly the companies should spend this amount. It will be best for the companies if they spend on social activities related to their day-to-day activities. For e.g Dabur is spending on sustainable cultivation for herbal products.
While the companies become aware of this, and take up more of such activities volunterily, they should not be coerced to do so, even though Minister for corporate affairs, Murali Deora, spoke about make it compulsory recently. It may have to do with the typical indian mentality of not doing something good unless it is being compulsory.
Check ITC's http://www.echoupal.com/
ReplyDeleteIndia needs more of these.