On the night of 31st December, people would have never imagined that the new year, which they were praying to be lucky and better, was going to turn into a nightmare that will have an enduring effect on their lives.
From the beginning, as the infection started spreading rapidly, governments of every country started using all types of resources that they have to study the unprecedented situation and to react accordingly. From country-wide lockdowns to unlock down, from increasing rate of testing and production of Personal Protective Equipment(PPE) to the development of vaccines, it’s an all-round battle for the government authorities, health workers, corporate sector and citizens. Extended lockdowns have further worsened economic troubles, but unless the vaccine is ready, social distancing, testing, and isolating is all we got to prevent the spread of this transmittable disease.
In this critical situation when revenue is insufficient for union and state governments both, most of the corporates and NGOs in Indian economy wholeheartedly extending their support and are playing significant roles in the distribution of sanitizers, PPE kits, ventilators with essential equipment and creating awareness of social distancing as an aid to mitigate the spread of this deadly infection COVID-19.
Here, comes the importance of Corporate Social Responsibility (CSR), which plays a crucial role in the age of this pandemic COVID-19, where people are trying their level best to get through this tremendous challenging time. CSR in general can be referred to as a corporate initiative to assess and take responsibility for the company’s effects on the environment and impact on social welfare.
India was the first country to make CSR mandatory and it is governed by Section 135 of the Companies Act,2013. Schedule VII of the Companies Act,2013 provides the list of activities that can be included in CSR.
Every company having a net worth of Rs 500 crores or more, or turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more during the immediately preceding financial year, must have a CSR committee and spend at least 2% of the average net profits earned during three immediately preceding financial years to CSR activities.
Ministry of Corporate Affairs in March this year, issued a circular mentioning that “all expenditures incurred on activities related to COVID-19, will be added as the permissible avenues for CSR expenditure including contribution to PM-cares Fund and State Disaster Management authority.”
It is mutually beneficial for both government and corporate businesses and the final absolute gainer will be a society as a whole. As an aftermath of this decision, some major contribution by Tata and Reliance Industries who pledged Rs 1500 crores and Rs 500 crores respectively with Reliance Ltd to distribute Rs 50 lakh mask and sanitizers for free. Adani foundation contributed Rs 100 crores to PM CARES, Larsen and Toubro announced Rs 150 crore and it provided its 1.60 lakh workers during the lockdown.
Besides donation from big conglomerates, many firms and individuals donated their one day salary, or a generous amount of money, essential equipment, collaborated with NGO’s to run community kitchens. Not to forget Apps based companies like Tiktok, Paytm, Zomato, Swiggy, etc. Also donated to PM CARES. Many corporate businesses also contributed to awareness programs like that of the Bharat Petroleum Corporation Limited(BPCL) awareness program in Nuh district, AMUL’s awareness campaign through its daily cartoons in newspapers and magazines, etc.
It is not the question of whether donations are adequate or not. What matters in these crises is the reach of facilities to diverse sections of society.
Concerns Related To Corporate Social Responsibility
One of the major concerns related to CSR is its mismanagement of funding to targeted states or areas because recent reports have shown that Maharashtra, Gujrat, Karnataka, Tamil Nadu, Rajasthan are major beneficiaries and least benefited are Uttar Pradesh, Bihar, Odisha who are more in crisis due to their migrated, unemployed workers. To resolve this problem, corporations should collaborate with NGOs which have a better understanding of specific needs and problems so that optimum use of funds can be done.
Another concern is about corporates finding reliable NGOs to collaborate and a way to monitor and track the use of funds and its impact.
CSR in Post-COVID times
It is very much evident that governments’ revenue receipts are decreasing and there are no signs of recovery to normal in few more months to come which implies that it will be a compulsion on the government to reduce expenditure on many next to essentials goods and services. A recent announcement by the government in September 2019 has widened the scope of CSR activities.
Officials mentioned that “now CSR 2% fund can be spent on incubators funded by central or state government or any agency or public sector undertaking of central and state government and making a contribution to publicly funded universities like IIT’s, national laboratories, and autonomous bodies like DRDO, ICAR, ICMR, etc.”
It means that even after cutting in the expenditure by the government, these institutions will have a sort of backup and it will boost the development in research in this pandemic situation as well. Although only 10,800 companies complied out of 21,300 companies, spending on CSR has gone up from Rs 10,066 crore in 2014-2015 to Rs 13,327 crore in 2017-2018. It was the highest in education, health, fight against poverty and malnutrition, etc.
Another benefit of CSR in the days to come will be the preventing deterioration of gains made in the area of Child Rights and Girl Rights. Since we all know that economic growth will decline further because of frequent lockdowns, hence, low production due to less amount of workforce means low income and thus, low consumption. This might push lots of children into child labour, malnutrition may rise, the underage marriage of girls may rise due to poverty. All this support will not only better the image of the companies in the market but it will also free up some fiscal space for the government.
In the coming months and years, it will not only be the government’s responsibility to fill the gap created in the economy due to this pandemic crisis but also of corporations and other capable authorities and organizations. Every stakeholder should complement each other because we are in this together. As Bill Ford said, creating a strong business and building a better world are not conflicting goals, they are both essential ingredients for long term success.