PURPOSE OF CORPORATE SOCIAL RESPONSIBILITY

1. BY
SURESH CHAND YADDANAPALLI
POST GRADUATE
PUBLIC HEALTH DENTISTRY
SIBAR DENTAL COLLEGE
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2. CONTENTS:
Phases of evolution
Demographics
History
Introduction
Aspects
Models
Conclusion
References
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4. 4
OWNERS
MANAGERS
OWNERS
MANAGERS
EMPLOYEES
OWNERS
MANAGERS
OTHER TARGET
ENVIRONMENT
OWNERS
MANAGERS
OTHER
TARGET
ENVIRONMENT
PUBLIC AT
LARGE

5. • India accommodates 17.5% of the world’s population
• 44% of its population being in the productive age.
• India has a robust economy and is recording a speedy growth. In
recent times, economists at the World Bank and the International
Monetary Fund (IMF) have tentatively suggested that within a
year or two, India’s economy might be growing more quickly than
that of China.
Growing Economy
Manpower
Education
Standard of Living
Health
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6. After decades of slow growth, India is now
consistently hitting economic growth rates well
above its historical average since becoming an
independent nation. Over the last 20 years, India’s
per capita income level has leapt from $355 to
$1,499 in 2013.
As per the first advance estimates of national
income 2016-2017 released by the central statistics
office (CSO) per capita net national income is
estimated to be Rs 1,03,007 at current prices
Poverty rates have dropped from 82 percent to 61
percent over the same timeframe.
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7. Credit for this transformation is largely
given to Indian government policies that
have slowly peeled back onerous business
rules, which have unleashed India’s
entrepreneurial spirits.
India’s dynamic companies have charged
onto the global stage in sectors such as
automobiles, information technology,
telecommunications, and consumer
products.
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8. India ranks on a select number of human development
indicators, compared to global averages, taken from the
Human Development Report:
26 percent of 1-year-olds are not immunized against measles
(global average: 16 percent).
6.5 physicians per 10,000 people (global average: 34).
68.3/64.7—life expectancy at birth for males/females (global
averages: 73.0/68.8).
62.8 percent adult literacy rate (global average: 81.2 percent).
1.11 sex ratio—boys per girls at birth (global average: 1.07).
200 maternal mortality ratio per 100,000 live births (global average:
145).
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2017 statistics:
India ranks 131 out of 188 countries on Human Development Index
Despite making major progress, India still ranks third among South Asian
countries- behind Sri Lanka (73rd) and Maldives(105)

10. In 2013, India adopted a new Companies Act that redefines
corporate governance rules in India.
Among its many provisions, the act includes a soft mandate
that medium and large companies must contribute 2 percent of
their profits (averaged across the previous three years) toward
corporate social responsibility (CSR).
Such a policy was much in line with the social welfare instincts
of the Congress Party, which was in power from 2004 until
May 2014.
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11. The National Rural Employment Guarantee Act (2005): Guaranteeing
100 days of paid labor to one member of every rural family in India.
Agricultural Debt Waiver and Debt Relief Scheme (2008): The
government waived existing loans made to 30 million farmers, with
accelerated payment plans for another 10 million farmers (and later
expanded).
The National Food Security Act (2013): Expands India’s programs of
subsidized food grain for the poor and other marginalized groups in society.
The Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act (2013): Establishes a
new process for reviewing land acquisition deals, including establishing
mandatory premiums for buying rural (four times the market rate) and urban
(twice the market rate) land for development purposes.
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Other reforms with distinct social elements enacted during the UPA
government include:

12. Studies show that there is a wide range in terms of the
size of corporate CSR expenditure. Most companies
surveyed contribute below 2 percent, though some are
well above this level. This new “mandate” is expected to
generate a substantial amount of new CSR spending—at
least $3.62 billion across India.
“India Inc likely to spend Rs 22,000 crores on corporate
social responsibility: Ernst & Young,”
The Economic Times, June 5, 2014, http://bit.ly/1yMBKQ7.
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13. The European commission(EC) defines CSR as “the
responsibility of enterprises for their impacts on society”. To
completely meet their social responsibility, enterprises “should
have in place a process to integrate social, environmental, ethical
human rights and consumer concerns into their business
operations and core strategy in close collaboration with their
stakeholders”.
The WBCSD (The World Business Council for Sustainable
Development) defines CSR as “the continuing commitment by
business to contribute to economic development while improving
the quality of life of the workforce and their families as well as of
the community and society at large.”
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14. According to UNIDO-(United Nations Industrial Development
Organization),
“Corporate social responsibility is a management concept
whereby companies integrate social and environmental
concerns in their business operations and interactions with
their stakeholders.
CSR is generally understood as being the way through
which a company achieves a balance of
. Economic
SocialEnvironment
(Triple-Bottom-Line Approach)
Also meeting the expectations of shareholder
or stakeholder
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15. From the above definitions, it is clear that:
• The CSR approach is holistic and integrated with the
core business strategy for addressing social and
environmental impacts of businesses.
• CSR needs to address the well-being of all
stakeholders and not just the company’s shareholders.
• Philanthropic activities are only a part of CSR, which
otherwise constitutes a much larger set of activities
entailing strategic business benefits.
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16. Benefits of CSR programme in a global Aspect:
1. Attracting and retaining employees-increase the
employee morale and sense of belonging to the
company.
2. Enriching the corporate reputation- positive image
and branding benefits are created to place the
company as a responsible corporate citizen in the
world market
3. Cost Savings
4. Revenue increase from higher sales and market
values
5. Brand value
6. Can avoid negative press and customer boycotts
(risk reduction/Management)
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17. CSR in India has traditionally been
seen as a philanthropic activity. And in keeping with the
Indian tradition, it was an activity that was performed
but not deliberated.
As a result, there is limited documentation on specific
activities related to this concept
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18. The new Companies Act replaced The Companies Act, 1956, an
outdated framework of corporate governance that gave the
Indian government a high degree of oversight into corporate
management. The new Companies Act empowers shareholders
to play the most critical guiding role.
A few of the salient features of the new Companies Act:
Every company will have a uniform fiscal year running from April
1 to March 31, which matches with the government’s fiscal year;
Publicly traded firms and large private firms must rotate financial
auditors every 5 or 10 years;
Every publicly traded firm and large private firm must have at
least one female director on its board of directors;
BACKGROUND:
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19. Publicly traded firms and large private firms must ensure that one-third of
the board should be “independent directors”;
Publicly traded firms must establish specific board committees if they are
not already established, including a
“Nomination and Compensation Committee,”
“Audit Committee,” and
“Corporate Social Responsibility Committee”;
The board of each company above a modest threshold must ensure that
the company spends 2 percent of its pretax profits (average from
previous three fiscal years) on corporate social responsibility activities,
or specify the reasons why it did not meet this target in its annual report.
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20. Importantly, under Article 135, subsection 5,
“the company shall give preference to the local area
and areas around it where it operates, for spending the
amount earmarked for Corporate Social Responsibility
activities,”
Meaning: covered companies will be expected to
expend their CSR programs where they have
operations. So the ultimate impact of the CSR
“mandate” could be felt with particular strength in those
areas with higher levels of economic activity.
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21. Companies Act, 2013, Clause 135: CSR
committee requirements:
A CSR committee of the board should be constituted. It should
consist of at least three directors out of whom at least one is an
independent director. This composition will be disclosed in the board’s
report as per sub-section (3) of section 134.
The CSR committee shall:
formulate and recommend a CSR policy to the board, indicating the
activities as specified in Schedule VII of the Act
recommend the amount of expenditure to be incurred on the activities
indicated in the policy
monitor the CSR policy regularly
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There was substantial improvement in the corporate social responsibility
(CSR) performance of most companies in 2016-17 over the previous year,
says an analysis by the Confederation of Indian Industry (CII).
The analysis, based on disclosures of close to 1,270 companies listed on
BSE, shows that these companies collectively spent ₹8,185 crore, which is 27
per cent more than the spend of ₹6,400 crore in FY15.
Out of these, 35 are public sector enterprises, whose contribution amounted to
32.16 per cent (₹2,632.5 crore) of the total CSR spend.
“The spend is 92 per cent of the required CSR budget of ₹8,900 crore, using 2
per cent of average net profits of three financial years. The companies
collectively had budgeted ₹10,257 crore, which is 15 per cent more than the
minimum budget required,’ CII said in a release.
http://www.thehindubusinessline.com/economy/csr-spend-rose-by-27-in-201516-
cii/article9642346.ece. Last accessed on 20/8/2017.

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29. Failure to disclose in the boards report attracts minimum fine of Rs
50,000 up to 25 Lakhs to the company.
Additionally, every officer in default’s is also punishable with
imprisonment for 3 years apart from fine too ( Sec 134(8))
Defaults where for no penalty is indicated-
Company and every office in default
i) One time fine of up to Rs. 10,000/-
ii) Rs. 1000 /- per day in case of continuing default
(Sec 450: residuary penal section)
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33. The broad set of issues to which companies must
devote their CSR spending was included is an
annex in the Companies Act.
(i) Eradicating hunger, poverty, and malnutrition, promoting health
care including preventive health care and sanitation and making
available safe drinking water;
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34. (ii) Promoting education, including special education and employment
enhancing vocation skills especially among children, women, elderly, and
the differently abled and livelihood enhancement projects;
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35. (iii) Promoting gender equality, empowering women, setting up homes and
hostels for women and orphans; setting up old-age homes, day care
centers and such other facilities for senior citizens and measures for
reducing inequalities faced by socially and economically backward groups;
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36. (iv) Ensuring environmental sustainability, ecological balance, protection of
flora and fauna, animal welfare, agroforestry, conservation of natural
resources, and maintaining quality of soil, air, and water;
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37. (v) Protecting national heritage, art, and culture including restoration of
buildings and sites of historical importance and works of art; setting up
public libraries; promoting and developing traditional art and handicrafts;
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38. (vi) Measures for the benefit of armed forces veterans, war widows, and
their dependents;
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39. (vii) Training to promote rural sports, nationally recognized sports,
Paralympic sports, and Olympic sports;
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40. (viii) Contributing to the prime minister’s National Relief Fund or any other
fund set up by the central government for socioeconomic development
and relief and welfare of the Scheduled Castes, the Scheduled Tribes,
other backward classes, minorities, and women;
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41. (ix) Having the central government approve contributions or funds provided
to technology incubators located within academic institutions;
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42. (x) Implementing rural development projects;
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43. (xi) Promoting slum area development.
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44. India’s development needs are immense. The country is host to some of
the world’s most striking social problems, often at massive scale. Yet the
country is also on a clear path of economic growth that is quickly
expanding prosperity to new sections of society. Focusing policymaking
efforts on economic growth will ensure this age of prosperity continues,
yet, at least initially, its benefits are likely to be most immediately felt by
those in the regions of the country that are poised for quick growth.
Conclusion:
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45. References:
1) Richard M. Rossow; Corporate Social Responsibility in India How the
Companies Act May Augment Regional Disparities, A Report of the CSIS
Wadhwani Chair in U.S.-India Policy Studies; www.csis.org
March 2015,pg: 1-22
2) Rakesh Bharti Mittal; Handbook on Corporate Social Responsibility in
India; www.pwc.in; 2013, pg:1-32.
3) An Analysis of Corporate Social Responsibility Expenditure in India;
Economic & Political Weekly, Last accessed on June21st 2017.
4) Singh, R and Aggarwal, S; “CSR Orientation of Indian Banks and
Stakeholder Relationship Marketing Orientation: An Empirical Analysis”,
Working Paper Series No. 683, Indian Institute of Managment Calcutta ,
Oct-2011,pg-1-37
5) Zynia L. Rionda; WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
8 QUESTIONS & ANSWERS, Catalyst Publishers, JULY 2002,pg:1- 15.
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46. 6) Eliza Sharma and Dr. Mukta Mani; CORPORATE SOCIAL
RESPONSIBILITY: AN ANALYSIS OF INDIAN COMMERCIAL BANKS; AIMA
Journal of Management & Research, February 2013, Volume 7, Issue ¼.
7) Shanker Adawal, Corporate Social Responsibility;
http://indiacsr.in/corporate-social-responsibility-by-dr-shanker-adawal. Last
accessed on June 22nd 2017.
8) corporate Social Responsibility in India Potential to contribute towards
inclusive social development, Global CSR Summit 2013 An Agenda for
Inclusive Growth; Ernst & Young LLP. Published in India, 2013, pg:1-28 .
9) Ernst & Young; CSR, The Economic Times, June 5, 2014,
http://bit.ly/1yMBKQ7. Last accessed on 20th August 2017.
10) Nandita Rani Kothia, Assessment of the Status of National Oral Health
Policy in India; Int J Health Policy Manag 2015, 4(9), 575–581.
11) http://www.thehindubusinessline.com/economy/csr-spend-rose-by-27-in-
201516-cii/article9642346.ece. Last accessed on 20th August 2017..
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