Last month, West Bengal Chief Minister Mamata Banerjee wrote to Prime Minister Narendra Modi about including contribution from businesses to the chief minister’s relief fund (CMRF) as money spent on CSR activities. Currently the 2013 CSR Act only considers donations to the Prime Minister’s National Relief Fund (PMNRF) as CSR spend. This new request was ostensibly due to the lack of funds in CMRF, which many companies choose not to contribute to because of this rule. The fund, which is being used to provide medical, education and other kinds of relief to people who are in desperate need of it, suffers as a result.
While this news isn’t too surprising, it does form part of an increasing trend wherein the State and its many officials are looking at corporate money (in the respectable guise of CSR) to fund their pet projects. Now, many of these programmes deserve to be funded even if they may be only partly effective because in a poor country like India millions of people still subsist on State support. However, if it’s State support, then it should come out of State funds. After all, what is the point of all those taxes and GDP growth if it cannot be used to provide a dignified life to every Indian?
Decreasing govt funds, increasing CSR money
The central government’s budgetary allocations to most of its flagship schemes have either flatlined over the years or seen a marginal increase that is still not commensurate with the actual expenses needed to implement these programmes. For some schemes, it has actually decreased. Also, the Union Budget registered a decline in social sector allocation, from an actual 1.92 per cent of GDP in 2013–14 to 1.68 per cent of GDP in the budget estimate for 2015–16 – a decline of 0.24 per cent. Among the BRICS countries, India has the lowest allocation for education and health in terms of percentage of GDP. All this while the population continues to steadily grow and unemployment figures see no sign of decline.
Instead of plugging the leaks in the delivery and implementation of these much-needed welfare schemes and increasing allocation, government officials seem to be turning to CSR to bridge the monetary gaps between funding and expenditure. In 2015, BJP MP PP Chaudhary (currently Union minister of state for corporate affairs and law & justice) asked over 11 lakh companies to contribute 7 per cent of their CSR funds to Swachh Bharat Mission and sponsor billboards for gram panchayats carrying the Swachhta message. But that was not all; he also wanted the employees of these companies to go and undertake cleanliness drives to presumably clean up the mess that they may or may not have been responsible for. It’s a wonder he didn’t personally supervise these drives.
Some CMs are not even waiting for the central government’s nod. Earlier this year, Haryana CM Manohar Lal Khattar announced plans to tap into the CSR funds of 21 public and private sector companies for welfare schemes such as Kanya Kosh Fund and Sweh Prerit Adarsh Gram Yojana.
Setting an unwanted precedence
Leading the way is PM Modi, who has exhorted corporate India to invest in all flagship programmes of his government including Swachh Bharat, Skill India, Namami Gange, and Beti Bachao, Beti Padhao, among others. This creates indirect and not-so-subtle pressure on companies to do the needful if they want to remain in the good books of Lok Kalyan Marg.
Even though in 2015 a government-appointed committee – headed by former urban development secretary Anil Baijal – to look into monitoring of CSR expenditure recommended that CSR spend be left to companies, there are many MPs who believe otherwise. For example, in this report, BJP MP Raksha Nikhil Khadse claims that the available CSR corpus can reduce government spending by 30 per cent and is easier to tap into than MP/MLA local area development funds as it has fewer strings attached. This kind of outsourcing of State responsibilities to corporates should alarm every right-thinking person, not least because of the potential for corruption, kickbacks, and plain inefficiency. In the same report, SK Jain, executive director of CSR at NTPC Ltd, said that the company receives between 50 and 100 requests every year from elected representatives to channel CSR funds into certain (read, their preferred) projects.
PM Modi has exhorted corporate India to invest in all flagship programmes of his government including Swachh Bharat, Skill India, Namami Gange, and Beti Bachao, Beti Padhao, among others. This creates indirect and not-so-subtle pressure on companies to do the needful if they want to remain in the good books of Lok Kalyan Marg.
Incentives or coercion
There’s no dearth of incentives from the government to induce corporates to invest CSR money in their many programmes. Unlike most CSR activities, only investments in Clean Ganga Fund and Swachh Bharat Kosh (apart from donations to PMNRF) are 100 per cent tax-exempted. This stems from the high priority given by the central government to these two programmes and caters to their own political agenda, even though the overarching goals may be noble. Whether this kind of preferential treatment is fair is debatable – excessive focus on certain projects may dilute and negatively impact the efficacy and funding of other equally worthy and urgent projects.
Some incentives are smart and acceptable though – for instance, last year the government launched an interactive web page on the NMCG (National Mission for Clean Ganga) website to encourage private companies to take up projects under Namami Gange as per their preference. However, Nitin Gadkari, minister for road transport, shipping and water resources, was on record stating the need for CSR resources from companies to help in this mission, thereby again contributing to this myth that CSR money should be subservient to government priorities. While on paper this may have come across as an innocent plea, the fact that more than 80 per cent of donations to the Clean Ganga Fund has come from public sector companies (till early 2017) is an indication that perhaps when it comes to the CSR decision-making process, companies have limited autonomy.