Dharmendra Jore Column: Ensure public welfare while seeking corporate funds

Published: 04 January, 2016 07:49 IST | Dharmendra Jore |

Over the decades, we have seen many corporate houses doing something worthwhile for society, even before the Union government made it compulsory for them to spare a share of their profits under their ‘corporate social responsibility’, or CSR, commitments

Over the decades, we have seen many corporate houses doing something worthwhile for society, even before the Union government made it compulsory for them to spare a share of their profits under their ‘corporate social responsibility’, or CSR, commitments.

As time has passed, CSR budgets have increased manifold. But corporates are also in a quandary. Not all of them have clarity of thought on their social commitments, and hence may want to know where and how to put in funds as part of their CSR so that it yields desirable results.

And it is this concern and a massive CSR potential that has made a cash-strapped Maharashtra government decide to try to get business players on board for implementing its public welfare schemes. The state’s task has become easier because several top companies of the country have Mumbai as their headquarters, of which many had started contributing to the social cause, much before a term ‘CSR’ made its way to the Indian corporate world.

The credit for ideating this novel concept goes to Finance and Planning Minister Sudhir Mungantiwar. He knows the state of Maharashtra’s coffers. Since he is expected to struggle to plan a sufficient outlay for welfare schemes, Mungantiwar has been asking corporate houses for collaborating with the government in a meaningful way. The minister has even planned schemes worth about R800 crore for the next fiscal, which he will display to corporate head honchos on January 8 in Mumbai.

To make the state’s request even more appealing, Maharashtra Governor Vidyasagar Rao has taken upon himself the task of hosting some 100 top industrialists at his official residence, Raj Bhavan. It is surely a good sign that the governor himself would be leading this association from the front.

The concept of CSR is a win-win situation for both investors and target audiences that the respective companies have on their mind. Experts like Aadhit B Balaji — who had published a paper at the national convention of the Institute of Chartered Accountants of India (ICAI) last year — succinctly explains the benefits of CSR. His research paper says that a good CSR activity could help in increasing a company’s revenue from higher sales and market share, saves costs, enriches the corporate’s reputation and attracts and retains employees.

“According to the Indian Institute of Corporate Affairs, a minimum of 6,000 Indian companies will be required to undertake CSR projects in order to comply with the provisions of the Companies Act, 2013 with many companies undertaking these initiatives for the first time. Further, some estimates indicate that CSR commitments from companies can amount to as much as R20,000 crore. Building a society which provides equal access to opportunities negates disparities and is a collective responsibility,” Balaji says.

It is beyond any doubt that companies based in Mumbai alone can generate hundreds of crores for Maharashtra and they will be more than happy to partner with the government in building community toilets, constructing water conservation projects, managing solid waste etc. Details pertaining to welfare projects that have been envisaged for seeking CSR will be made public at the Raj Bhavan meeting. When such a declaration happens, the companies should be expecting the government to ensure that their money brings about change that enhances their brand image.

The established players whose CSR activities are implemented better than the government’s own schemes, may feel concerned because any goof-up (assuming that the government would be the implementing agency) committed in the CSR activity would cause an irreparable dent to their carefully cultivated credentials and brands. New players may face an even bigger problem if things go wrong for their respective brands. Correcting brand image proves to be a very costly affair for any corporate.

So it becomes pertinent on part of the government that it asks corporates for solutions to the issues that may truncate their partnership even before it takes off in the long run. The exercise of seeking CSR should not smack of bullying by the government. We expect the governor and planning minister not to sing elegies to the state’s depleting coffers when they make presentations to corporate bosses. The CSR funds will flow only when business houses are convinced of good results.

Dharmendra Jore is political editor, mid-day. He tweets @dharmendrajore. Send your feedback to mailbag@mid-day.com

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