'CSR spending should be made mandatory for private firms'

The Centre's proposal to downgrade 'ratna' status of Public Sector Enterprises if they fail to spend two per cent of their net profit on Corporate Social Responsibility (CSR) activities has triggered a debate on why it is not mandatory for the private sector.

Standing Conference of Public Enterprises (SCOPE) Director General U D Choubey has made a strong pitch for a level playing field and said the private sector must be asked to spend 2 per cent on CSR.

CSR is emerging as a vital aspect of doing business these days. The government is planning to make it mandatory for corporates. What is your take on this?

Today, Indian economy is on a fast growth trajectory. It needs to maintain growth momentum to emerge as leading economic power.

However, industrial and economic development without proper human welfare and distributive justice cannot bring inclusive growth as it creates economic inequalities.

It is therefore, necessary that benefits of development reach all societal groups.

In this context, CSR has acquired added significance. Here, it is pertinent to mention that CSR has been a forte of the public sector.

Still many corporates are not in favour of making CSR mandatory. What can be the reasons behind their reservation?

Different views are being expressed in favour and against the move. In a country where there is such a disparity and large part of population living in villages are below the poverty line, the need for CSR supersedes everything.

Here, I will like to say that it must be the prime concern for all corporates, whether public or private to discharge their CSR as part of nation building.

As a corporate citizen, entire industry fraternity has the responsibility towards citizens of the country.

As regards those who say mandatory CSR will invite abuses, I will like to mention that the benefit derived will be much greater than otherwise.

Further, checks on abuses can be made by implementation of adequate regulatory measures. CSR is an essential ingredient of corporate governance.

How does the public sector view CSR?

The PSEs in pursuit of the triple bottom line of people, planet and profit have assigned a high priority to the adherence of ideals of CSR.

In fact PSEs were set up with the twin objective of economic development with social justice.

They have been rendering yeoman service in areas of their operations, covering civil amenities such as drinking water, sanitation and hygiene of the populace, particularly of the underprivileged ones.

Besides, they have been taking care of education, health care, infrastructure, natural disasters like droughts and floods of affected segments, besides contributing to sports and games.

Even after liberalisation of Indian economy, they have pursued CSR with increased commitment and involvement as responsible corporate citizens.

Department of Public Enterprises (DPE) has issued "Comprehensive Guidelines on Corporate Social Responsibility".

The Guidelines encourage PSEs to meet high standards of CSR and discharge their responsibilities in a planned manner.

Public enterprises have already adopted government guidelines on CSR making it mandatory to allocate about two per cent of the net profit for carrying out CSR programmes.

However, they feel there must be level-playing field.  Therefore, the same should be extended as a mandatory provision for all private enterprises to earmark two per cent of their profit for CSR activities.