By TradeIndia Team in Business Tips — 03 Feb 2017

How CSR Can Help Tackle India’s Structural Problems

Teeming with vehicles, India’s cities and towns are almost on the verge of coming to a standstill, many towns and villages in India don’t have quality primary education centers, pollution has reached alarming levels in metros, vast swathes of India have poor healthcare facilities. The aforementioned facts are just a few in a long list of reasons clearly indicating that India is facing massive ( some would say insurmountable) structural problems. The majority of India’s structural problems are related to basic facilities that are the natural rights of all citizens( natural rights mean the rights that are unquestionable and any citizen of any democratic country has it just by virtue of his/her birth).

So what are the reasons for India’s innumerable structural issues. Two reasons crop inside our minds, one being a population of 125 crore people and second being a notoriously inefficient bureaucratic system. Although to be fair, it has to be accepted that things have markedly improved over the past decade and a half, yet we are far from achieving equitable growth. One thing becomes clear in all this, it’s the fact that without effective private participation, India’s structural issues aren’t going to be solved. This conclusion becomes even more true when seen in context with the success that firms like Tata & Sons, Wipro have achieved with their CSR (corporate social responsibility) initiatives.

Recently the metropolitan museum of art, New York awarded Nita Ambani ( chairperson of the Reliance foundation) for her philanthropic efforts. Although appreciable, such cases are few and far between and corporate firms in India still have a lot to do when it comes to “giving back to society”.

How is CSR different from corporate philanthropy

Contrary to popular belief, corporate philanthropy and CSR( corporate social responsibility) are more similar than different. The only difference that can be stated is that corporate philanthropy has a more limited and narrower scope than CSR. Corporate philanthropy can relate to a simple blood donation camp organized by an organization or fundraising for a noble cause. As for CSR, it refers to dealing with various social and economical issues in a planned and detailed way over a long period of time. The issues could relate to human rights, minimizing environment pollution, gender equality and many more.

Recent changes in CSR laws

In 2013, the government of India made it mandatory for any company with an annual turnover of INR 1000 crore or more, net worth of INR 500 crore or more or a net profit of INR 5 crores and more to undertake CSR activities. Following the guidelines, many corporate firms that were not engaged in any CSR activities have recently undertaken it. Hopefully other corporate firms will follow in their footsteps soon. Under the new law, companies meeting the above specified criteria are required to spend at least 2 percent of their average profit over the last three years for CSR initiatives. The law has specified a wide range of activities under CSR, some of which are women empowerment, combating deadly communicable diseases like HIV AIDS, poverty eradication, disaster management and many more.

Structural issues that can be solved through CSR

One of the biggest problems in India today is a lack of access to education for it’s citizens. This problem encompasses issues such as lack of quality primary schools, limited number of seats in colleges etc. Organizations with the requisite resources should step forward and set up and support educational institutions, starting with primary schools ( as this is the area that needs the most focus). Wipro care ( managed by Wipro) is a great example of how CSR can make a difference. It has transformed primary education in many parts of India by constructing schools, hiring the best teachers, giving school students access to the best technology etc.
One major area where CSR can make a big difference is in improving public transport systems in our cities and towns. It could be done in many ways, from organizations operating their own bus service to partnering with the government in finding new avenues that would markedly improve public transport in our cities and towns
One major area where CSR has been ineffective till now is the healthcare sector. Although there are organizations that manage and run various hospitals through their own resources, still much more needs to be done. One feasible way would be setting up of small clinics in rural areas and small towns of India. These clinics would offer various treatments at minimal costs, thus providing proper healthcare to people living or working nearby
Many parts of India still lack access to pure drinking water. This is because of varied reasons ranging from leakages in the pipeline to problems with the water purification process. Organizations with suitable resources can solve these problems and provide pure drinking water( which is a basic natural right) to the public
Organizations can also run awareness campaigns aimed at changing the mindset of people towards gender equality and women empowerment
Another issue that India is facing is a lack of proper sanitation and drainage systems. This generally results in adverse long term health effects on people. CSR initiatives can contribute towards addressing this issue
One major structural problem that the Indian economy faces is a lack of skilled manpower in the manufacturing sector, this is also the reason why India lags behind other developing countries such as China. As part of their CSR, organizations can set up programs to train workers
Infrastructure development and management can also be effectively done through CSR. Infrastructure is one of the major sectors that help in a nation’s overall development. To be more effective in this endeavor, organizations can partner with the government

Obstacles that hinder CSR initiatives and how can they be corrected

It has been observed that due to a lack of clarity and information,two or more companies end up duplicating each others CSR initiatives, resulting in a wastage of time and other resources. This can be corrected by governments, both at the center and the states playing a more proactive role and sorting out issues such as a lack of proper communication between two organizations undertaking CSR activities in the same area or the in the same sector
It has also been noted that partnership between the organization undertaking CSR activities, the government and the local community lacks effectiveness and is sometimes hijacked by vested interests. Scenarios like these must be prevented to ensure the success of CSR initiatives
The government can also think about increasing tax benefits to firms that undertake CSR activities, thus encouraging more firms to get involved. Although questioned by many, this approach is followed by many countries the world over with varying degrees of success
In some instances it has also been found that firms undertaking CSR tend to favor urban areas, thereby negating the whole purpose of the CSR itself to a large extent. The government can mandate that a certain percentage of total undertaken CSR activity should be focused on rural areas only
Another common problem regarding CSR initiatives is a lack of awareness amongst people about them.This can be corrected by the government through undertaking various awareness campaigns aimed at informing people about the benefits they will receive from CSR initiatives
Another issue that has been observed is that people in some parts of India do not trust outsiders and thus view all CSR initiatives in their area with suspicion. Some go even to the extent of thinking that the CSR initiatives have been undertaken by people whose only aim is to usurp their land and homes. Government has to play a proactive role in situations like this, earn the trust and goodwill of native people there and educate them about the benefits of such initiatives
One novel method is for the government to set up a start up fund specifically aimed at funding start ups catering to sectors such as education, renewable energy, disaster management etc. Organizations can contribute capital in the start up fund as part of their CSR activity

FAQs:

Ans. Environmental, philanthropic, ethical, and economic responsibility are the four traditional categories of corporate social responsibility.

Q. What is the primary objective of CSR?

Ans. Corporate social responsibility aims to give back to the community, participate in charitable causes, and provide positive social value. Businesses are increasingly turning to CSR to make a difference and create a positive brand.