CS Saibal C. Pal- Advocate
Swami Vivekananda blessed by Sri Ramkrishnadeva worked tirelessly for the upliftment of mankind ultimately for his motherland. He was a patriot and all his actions were towards the direction. He always thought for the untouchables and down trodden. To him there was no caste distinction and challenged kings to give up illusions and encouraged them to work for the benefit of the downtrodden. Empowering the society through education and enterprise was his objective. He preached and practised the path of Vedanta. He visualized the need for women empowerment through education and influenced Sister Nivedita to come all the way from England to spread women education in India. . The school which Sister Nivedita started is continuing to educate girl children. It would not be out of place to mention that as back as 1893-94, Swamiji said that girls could take up photography as a profession.. It might have sounded ridiculous way back then but to-day there are many women professional photographers. Sri Ramkrisnadeva took Swamiji under his tutelage and created Swami Vivekananda out of Narendra Nath Dutta. The Raja of Khetri , his disciple, gave him the name of Vivekananda. . Teachings of Swamiji are something different from others. He combined all in one to build human beings who could face the world and not run away and encouraged the affluent to support social investment. Before reaching the US, Swamiji felt for the deplorable condition of Indians under British rule. Indians remained without adequate food, education and shelter and were exploited by Britishers. By travelling throughout the country he experience a number of things which gave him the vision he shared with the world, Swamiji reached the shores of US unknown, uncared with a heavy heart about India. . By dint of his caliber, Swamiji coutld attend the World Parliament of Religions held at Chicago in 1893 through the good offices of . Dr Wright, professor of Harvard University who introduced Swamiji to the Organizing Committee of the conference and compared Swamiji to the sun which is the source of all energy and light. . On 11th September,1893 in the Parliament of Religions with his first utterance, Swamiji became the darling of the crowd and was adjudged the best speaker giving Hindusim the frist place among the all religions. From then there was no looking back. He went from one achievement to another . Swamji did not spread wealth to the human race but spread the means to it. Swamiji went on with man making for the upliftment of the society. Swamiji encouraged Jamshedji to build a steel plant in India and that is how,Tata Steel Ltd, was set up at Jamshedupur. He felt that industrial advancement would require the development of indigenous technology. Jamshedji followed his words and gifted the first major Indian steel company and also the Indian Institute of Sceience at Bangalore the pioneering research centre for development of science and technology. It figues in the 100 top research institutions in the world. . Swamiji aroused entrepreneurship to strengthened the economy and saw that entrepreneurs did not forget to repay the society for his achievements through contributions by them for empowerment of the society.
Swami dreamt of all inclusive and sustainable development and worked relentlessly for it. He believed without a stable society all efforts are bound to fail. Swamiji chose John D.Rockfeller to start social development from earnings from his enterprise. Rockfeller followed Swamii’s advise though initially reluctantly by making him contributie from the wealth amassed from industry for social development through empowerment..
Corporate Social Responsibility (CSR) activity enforced as law is the reflection of the vision of Swamiji..
Western world experienced growth by channelizing revenue earned from the industrial sector to the social sector for development. Social sector gained and experienced empowerment which led to success of the society at large. Social sector has donned an organized look. There is investment in the sector where surplus generated is ploughed back. While the industrial sector emphasized on distribution of earnings, the social sector aimed at retention of earnings for future development. .
Western world gradually realized that social upliftment was important and could not be ignored. Accordingly, several charitable organizations came up for social development in various fields. While some entrepreneurs donated funds for education, others contributed for research, eradication of diseases, child and women welfare and empowerment, old age support and a host of other things. Following the foot steps of Rockferrler,. Bill Gates, Warren Buffet and several others have come forward for supporting causes for the progress of society. It is realized that business cannot stand alone without the participation of society . India has seen the likes in Azim Premji, S. Nadar, Anil Agarwal, Ratan Tata,, the Birlas, Singhanias . and a host of others engaging in social development projects.. Funds from industry have helped to build several schools, colleges, institutions, research centres and are giving birth to enterprises.. Deshbandhu Chittaranjan Das donated all his property for the Indian freedom struggle. He revered Swamiji and adopted his principles and was blessed to remain in the minds of the people for his advocacy in Rishi Aurobindo’s case. .
Fundamentals of the law of CSR currently in force in India since 1.4.2014 rest on the fact that not only public policy but even corporates should be responsible enough to address social issues. So companies have been asked to deal with the challenges and issues so long solely overseen by the state.
CSR is not new to India. It is a tradition having existed from time immemorial. . Much has been done in recent years to make Indian Entrepreneurs aware of social responsibility as an important segment of business activity but CSR in India is still unknown. Law has been framed but its success will depend on its implementation. Approach of companies towards CSR has to be in line with their attitude towards mainstream business- setting clear objectives, undertaking potential investments, measuring and reporting performance publicly.
The Ministry of Corporate Affairs notified Section 135 and Schedule VII to the Companies Act 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014 effective from April 1, 2014.Every company having either net worth of Rs 500 crore or turnover of Rs 1,000 crore or net profit of Rs 5 crore, shall have to incur at least 2% of its average net profit of the immediately preceding three financial years on activities listed in Schedule VII to the Companies Act,2013. MCA issued General circular No. 21/2014 dated 18/6/2014 clarified activities failing under CSR. Now, support for road safety is a CSR activity. Net worth, turnover and net profits determinants of eligibility of CSR are to be computed pursuant to S 198 of the Companies Act, 2013 . Foreign companies shall have to prepare accounts as per S. 381 (i) (a).
CSR Activities
Activities listed in Schedule VII may be included by companies in their CSR Policy. The listed activities include :
(i) Eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation and making available safe drinking water;
(ii) Promoting education, including special education and employment enhancing vocational skills specially among children, women, elderly, and differently able and livelihood enhancement projects;
(iii) Promoting gender equality, empowering women, setting up homes and hostels fro women and orphans, setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by the socially and economically backward groups;
(iv) Ensuring environmental sustainablility, ecological balance, protection of flora and fauna, animal welfare,,conservation of natural resources and maintaining quality of soil, air and water;
(v) Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art,; setting up public libraries ,promotion and development of traditional arts and handicrafts;
(vi) Measures for the benefits of armed forces veternas, war widows, and their dependents;
(vii) Training to promote rural sports, national recognized sports, Paralympic sports and Olympic sports.
(viii) Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Schedule Tribes, other backward classes, minorities and women;
(ix) Contributins or funds provided to technology incubators located within academic institutions which are approved by the Central Government;
(x) Rural development projects. .
Non- profit organizations (`NPOs’) with three year track record are eligible to receive fund for CSR activities. Fund received by them must be deployed in the country. . The Act requires companies to incur expenditure towards CSR in areas of their operation. CSR fund cannot be spent on activities which form part of the usual business of the company for exclusive benefit of employees and/or their family members.
CSR Committee Formation and Policy
Provisions of the Act requiring companies to contribute towards CSR are required to appoint a Corporate Social Responsibility Committee. Such Committee must include at least three directors out of which one shall be independent. CSR Committee shall prepare a Policy on CSR which must be approved by the Board. CSR Committee shall prepare a budget, and oversee the utilization of fund allocated for each activity as per Policy of the company..
Monitoring CSR Activities
CSR activity can be undertaken by the organization or through any independent non-profit organization with three year track record which may be registered as a society registered under the Societies Registration Act, 1860 or similar act adopted by the concerned state being a delegated legislation which allows every state to have its own Act near thereto the original act or the India Trust Act,1882 or Company registered under S 8 of the Companies Act,2013 (NPO.).
CSR activities undertaken by companies shall have to be entrusted only to a unrelated society, trust, foundation or S 8 company which has established record of at least three years in CSR work. The initiative of the Government to embrace companies with the social investment partnering the Government will go a long way for overall economy of the country. It is not possible for the Government to fund and oversee minutest of social development. CSR activity through corporate funding could be the answer to speedier social development.
Report on CSR activities to be furnished by Companies
Companies are required to prepare detailed report, in the prescribed format, regarding observance of CSR Policy framed by a Company. The report shall include information on the formation of the CSR Committee, amount of CSR expenditure, with reference to projects undertaken. The report must be included in the Directors Report (S 134) circulated to the shareholders along with the financial statements comprised in the Annual Report. The report must also included in the website of the company..
The Report on CSR activities undertaken as per the Policy adopted must also include a declaration from the CSR Committee that implementation and monitoring of the Board approved CSR activities undertaken by the Company is, as per the CSR Policy..
Failure to Comply CSR Provisions
If the Board does not spend on CSR as required by Ss 135 read with 198, 381 (a) of the Act, disclosure of the same with reasons for non-compliance must be reported in the Director’s Report (S 134) for information of the shareholders.
The Act has not imposed penalty for failure to comply or any deficiency in compliance of S 134 of the Act. However, in the long run failure to comply with the provisions will give RoC right to issue show cause by ROC. This can be done by inclusion of a provision in the Rules framed by MCA on CSR implementation.
Update on CSR spending by Corporates
Spending on CSR activities are watched with keen interest. During the year 2012-13 spending on CSR initiatives amounted $ 600 m with RIL,Coal India, Tata Steel and SBI being the major spender. Other companies are gearing up to meet the challenge generated in the area. Fund spent by companies are complementary to the various social initiatives of the government or NGOs. Projections reveal that CSR activities and spending are estimated to grow more than four times which could touch $ 2.5 billion (over $ 15,000 crore) a year. Technology based companies could contribute 20 per cent or more of the amount. Analysis of CSR activities of the top 100 companies bring out the fact that the mode of expenditure is primarily thorough NGOs and other NPOs. Around 90 per cent of the companies falling within the purview of the provisions of CSR are channelising fund through the organisations. Besides providing monetary assistance companies are now also beginning to show greater involvement in social oriented activities like volunteering and providing expertise on best practices to NGOs. Health and education sectors have received disproportionate attention with 80 per cent of the companies supporting the above fields. Providing mid-day meals at schools, health check- up and blood donation are the popular initiatives. IRIS Business Services of Mumbai, experts in XBRL experts catering to services in the banking and corporates donates computers each year in the rural areas for the spreading computer literacy. Such action by corporates is bound to strengthen the social sector. It is important that the social sector along with economic growth. Unless the social sector is strengthened growth of the economy will be marginalized. With increase in CSR spending society could inch towards all inclusive sustainable development . .
Implementing Agencies of CSR Policy of Companies
CSR activity and spending will be undertaken mostly by NGOs and NPOs which will be either a society, trust or S 8 Company. While management of S 8 companies is expected to meet the provisions of the Companies Act,2013, management of Societies and Trusts will have to be closely monitored. Work force employed in this sector will need to be trained particularly in the field of financial management. Steps to strengthen the sector through professional management should be inititiated. Companies should earmark funds to create training of work force in the field for it should be remembered unless professional management is introduced in the sector, the funds flowing into the sector will not be utilized as per the objective of the contributors CSR spending in the desired direction will take time to take off and its benefits will reach the society gradually. India has witnessed the enactment of numerous laws while some have brought changes others have failed. So the success as aimed through the provisions of law will depend on its effective implementation. It must be remembered that Companies as partners of the Government for development need to be treated with due respect for ultimate success of this scheme.
Conclusion
Swamiji sowed the seed of CSR in John D. Rockfeller in 1893-94. John D Rockfeller Sr formally founded The Rockfeller Foundation in 1913 in US and exactly 101 years later CSR has come to India as a legal provision. Swamiji’s vision empowered by Sri Ramkrishna on industry and channelizing a portion of the earnings from industry towards social empowerment for advancement is a reality. CSR became law in India on the 151th Birth Anniversary year of Swamiji. CSR is not new to India . Swamiji made the west realize the importance of CSR which has come back to the country . This time as law. Anything given comes back. Maharaja of Ketri,the disciple of Swamiji arranged fund for Swamiji’s journey to US for the Parliament of Religion in 1893. The Maharaja used to send Rs 100/- per month to the mother of Swamiji as requested by Swamiji. After his death the Estate of Khetri continued to send the amount to Monther of Swamiji even after the death of Swamiji till her death. To-day while palaces of bigger Maharajas have crumbled and have become dust, the Palace of Khetri continues to stand under the patronage of Ramkrishna Mission and Math. Maharaja of Khetri did not give for anything in return. Such should be the attitude while giving. It is an important lesson for those fulfilling CSR.
*Copyright with Author
Edited by Soubhik Chakraborty, Advocate.
