Public Administration Mains 2018 : Model Question and Answer - 91
(Public Administration Paper II / Chapter: Public Sector Undertakings)
(Current Based) Question:
What is corporate social responsibility ? (15 Marks/250 Words)
Model Answer:
The Indian Companies Act (2013) mandates that Indian corporates, public and private, must allocate at least 2 per cent of their net profits for CSR (Corporate Social Responsibility). The Act defines broadly the social framework within which companies should spend their CSR funds but beyond that, companies have the freedom to identify the projects and determine the modalities of implementation.
The government is responsible for social development. Corporates cannot replace them in this role. But governments need help. Corporates can make a meaningful contribution especially if there is a platform that allows them to offer the totality of their skills, technology and resources. The above model for CSR provides such a platform. The corporates will no doubt initially resist the dilution of control over this discretionary fund. But this resistance might weaken if they are assured that a collaborative model will generate a greater bang for their social buck. The Niti Aayog should convene a meeting of the custodians of the “CSR trust” and ascertain the corporate response.
The Economist magazine had declared CSR to be a “fad” when the concept was first introduced into the corporate vocabulary. Corporates have indeed, for long, regarded CSR as little more than a business necessity. They did not spend money on social projects because of an underlying social commitment or moral suasion. This attitude has, in my view, undergone a subtle but definitive shift in recent years, large-cap professionally managed companies have woven social responsibility into the fabric of their corporate values. (Total Words- 250)
Valuable inputs from The Indian Express Coulmn: ‘Over The Barrel: Because the business of business isn’t just business' by Vikram S Mehta
(Linkages: Indian Companies Act and Corporate Social Responsibility, CSR and Public/Private Sector, Corporates and Social Commitment )