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 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.

Do we elect government for diverging of their responsibilities to other entities or for accepting the responsibilities themselves?Sujeet Patil3