Relief for India Inc - Government of India unlikely to make CSR mandatory

In what could be termed as a relief for India Inc, a top Government of India official on June 20 said the government did not wish to make corporate social responsibility (CSR) spend mandatory, but would instead come out with ‘flexible', ‘directional' guidelines, reports PTI.

“There is no way the government wants to mandate it. If we make it mandatory there can be thousand and one ways to bypass it,” Corporate Affairs Secretary D. K. Mittal said at a meeting organised by the Bombay Chamber of Commerce and Industry on CSR, here in Mumbai.

The government would come out with ‘forward looking' CSR spend guidelines, he said, adding, “It will be only directional and not mandatory. We want it to be flexible. But once the new norms are in, firms will have to disclose their CSR spends or non-spending.”

“Like elsewhere, we want the new Companies Bill to include the CSR code and we want corporates to mandatorily disclose in their annual reports the codes which they adhere to or do not adhere to,” Mr. Mittal said.

To the question what difference guidelines would make if CSR was not going to be made mandatory, he said the new Bill would make the whole process more transparent. The new Companies Bill would be tabled in the monsoon session of the Parliament scheduled to commence from August 1, 2011. The 2 per cent compulsory CSR spend proposal, mooted by Mr. Deora's predecessor Salman Khurshid, had sparked off an intense debate, with majority of corporates favouring voluntary CSR spend. 

At the same event, Chief Election Commissioner of India S Y Qureshi talked about CSR and highlighted the “double standards” of the corporates who were “generous only when it comes to political donations, because there is a lot to be gained from that.” He also said corporate India has no right to complain about governance deficit or political corruption “when you don’t even bother to get out of your homes on a polling day."

With the conformation from the top government officials, the year long discussions whether to make CSR mandatory or not has been put on rest for ever. Earlier in several occasions Government of India has advocated strongly to make CSR mandatory and published Voluntary Guidelines for CSR during late 2009.

Though the former minister Salman Khurshid advocated strongly for minimum two per cent spending for the cause of Environment or Sustainable Development for the society, the present minister may not be falling on the same line. The reason could be pressure from the big corporates on the present minister who may have succumbed under the repeated requests or threats and allowed companies to pollute environment. Whether Team Anna listening?