It appeared timely, Madras Chamber of Commerce & Industry organising a conference on Corporate Social Responsibility – The Next Phase just three days ahead of the Budget. It has anticipated the Finance Minister drawing upon CSR funds for the Higher Education Financing Agency (HEFA) to develop 10 public and private institutions to emerge as world-class teaching institutions with affordable access to high quality education for ordinary Indians.
The President of the Madras Chamber of Commerce and Industry S G Prabhakharan mentioned that the mandatory two per cent of profits stipulated as contribution for corporate social responsibility helped raise Rs 20,000 crore, but only around Rs. 6000 crore could be spent. Cognizant’s Lakshmi Narayanan explained this amount in perspective: non-government organisations receive and spend annually Rs 60,000 crore, while the CSR spend amounted to just a tenth of this!
Lakshmi provided a measure of the government spend on welfare: Rs 80,000 crore budgeted by the rural development department. If the welfare schemes of all the ministries such as education, health, and social welfare are aggregated it amounts to around Rs. 800,000 crore. He quoted Bhaskar Chatterjee’s report on the impact: that the corporates create greater impact of such spending on welfare than the government and that the government and the corporates worked together the impact will be phenomenal.
Lakshmi referred to the interest of the government to direct CSR allocations to areas designed to reduce its own burden! He cited three instances: One, the HRD ministry seems to believe that the large expenditure incurred on higher education has to be shared by corporates because they benefit from the copious availability of educated manpower: “IIT education involves large subsidisation by the government. If the government has to reduce this, it can either increase fees four’fold or arrange loans that could be repaid by the students. The government seems to nudge gently IITs to tap the CSR resources,” said Lakshmi.
Two, the National Skill Development Corporation envisages skilling 100 million over 12 years. Six years of these have already gone. Since the skilled manpower would directly benefit industry, why not make the corporates bear the cost?
Three, can a separate fund be created to which corporates can contribute to provide succour for natural calamities?
Lakshmi pointed to the eroding freedom of corporate to spend on CSR issues selected by them. He expressed concern over such directions denying funds to worthy causes. “Can this mean the large spend by corporates and NGOs on public schools would end? Can this mean large corporates like Infosys would be forced to vacate donating midday meal programme for school children through the Akshaya Patra?” he asked.
The three theatre model...
Lakshmi Narayanan cited the three theatre model profounded by Prof Kasturi Rangan of Harvard Business School.
• One, route funds through an NGO in a chosen field for providing succour.
• Two, fund a programme in which the benefits can operationally help the donor company. eg. Shriram Transport Finance Company setting up driver training institutes or Michelin Tyres setting up an auto-rickshaw training programme. The beneficiaries can be employed (not mandatory) by the donor company.
• Third benefits can directly accrue to the donor company. Like Hindustan Unilever Ltd funding SHGs in remote villages to train beneficiaries in selling detergents and ultimately employing them in marketing.