Wipro Chairman Azim Premji on Thursday came out strongly against the idea of formulating laws on mandatory spending by industry on corporate social responsibility. “I don’t think you generate CSR by putting statutory requirements. I think there is enough social consciousness among the larger companies to drive it on the basis of what they consider their responsibility,” he said.
Premji was addressing a joint press conference in New Delhi with philanthropists Bill Gates, Melinda Gates and Warren Buffett.
He was responding to a question on the government’s plan to make it mandatory for corporates to spend 2 per cent of their average income of three years as part of the proposed Companies Bill.
“My concern is that you get legislation…and a lot of abuse takes place from that legislation in terms of what you define as CSR and what you define as branding. I would be against it,” Premji added.
He, however, said that the government is welcome to issue such a proposal “as a guideline rather than as a mandate or rather than as a legislation.”
India Inc has been opposing the proposed move to fix a threshold for CSR spending in the legislation.
Minister for Corporate Affairs Murli Deora had earlier said the government is willing to have a discussion on the matter with industry.
“I think the government is also weighing that seriously in terms of how they can encourage it rather than how can they compel it,” Premji said.
However, Buffett, who also addressed the press conference refused to comment on the issue.
“I know nothing about this tax matter,” said Buffett, the multi-billionaire American philanthropist.
The idea of formulating laws for CSR activities is pinching the corporates and even CPSE are no exception. Government has given its guidelines for CSR activities asking for a certain percentage of Net profit of the previous year to be spent on CSR activities, depending upon the Turnover of the CPSE’s. The so called tax will actually prove beneficial for the industry, as it is setting a benchmark and specifying a limit to the expenditure.It is creating a threshold limit of expenditure. The organisation is well informed of its corporate social responsibility and accountability. The wide fluction in expenditure in different financial year can also be avoided as of now it will be based on the certain percentage of profit. It will relieve the loss making enterprises from the added burden of CSR cost.
The industry survive in a environment that consist of customer, employees, sharehoders, creditors, financial institution etc. The organisation uses resources from the society. The beneficiary of CSR expense that is society at large cannot question the expenditure incurred on CSR once the company has meet its liability as per the specified guidelines (other than exceptional situation). The comparison of expenditure between industry shall also be uniform and on the equal footing. There will be no tussle on expenditure incurred amongst different sector for example Banking sector and Steel Sector. All industry and organisation will come to the same platform.
Therefore i believe that setting a standard level of expenditure for CSR will definitely bring uniformity and better regulation and control on this expenditure will be made in time to come.
Chandan Bagaria.