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Mandating CSR spending won't help

Author: Business Standard , Published on: 9 January 2016

If CSR could substitute for state action, Gates Foundation would have transformed Bihar...The inclusion of CSR spending in the Companies Act suggests a basic misunderstanding of the role of corporate activity in an economy. Corporate activity cannot be a substitute or proxy for the government in enhancing human development indicators. One obvious reason is scale: No company, no matter how large and open-handed, can match the spread or penetration of a government - particularly in India. Had this been the case, the Gates Foundation, for example, with its awesome financial outlays and admirable programmes, could well have transformed Bihar, its focus area for many years, into a model of health, hygiene and sanitation. That apart, few corporate groups, oriented by their nature to profit, are interested in social spending as an end in itself. For the most part, large manufacturing companies tend to confine their CSR activities to the ambit of their operations.

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