India’s approach to Corporate Social Responsibility (CSR) is unique due to its integration with legislative mandates, making it distinct from others globally. The Companies Act of 2013 marked a significant milestone by making CSR activities mandatory for certain categories of companies. Section 135 of the Act requires companies meeting specific financial thresholds to spend at least 2% of their average net profit of the preceding three years on CSR activities. This legislative approach reflects India’s commitment to aligning corporate activities with national developmental goals. Prime Minister Narendra Modi has emphasised the importance of CSR in Indi a’s development agenda. In one of his recent addresses, he stated, “It is our collective responsibility to ensure that the underprivileged are empowered, and this can only happen when businesses contribute to societal development.”
CSR has enlarged its scope by responding to the framework enshrined under the Directive Principles of Social Policy (DPSP). With the main aim of the welfare of the people, DPSPs are not only guiding principles for governance but are also seen as essential for the country’s socio-economic transformation. A close look at DPSP contained in Part IV of the Constitution of India (Articles 36–51) reveals that these principles are based on three ideological sources and objectives, viz., Socialist, Gandhian, and Liberal intellectual principles. The Constitution architect Dr. Ambedkar referred to DPSP as a ‘Novel Feature’ and accepted the Sapru Committee’s recommendation to segregate the rights among justiciable and non-justiciable, keeping DPSP as non-justiciable. CSR activities fill this vacuum because of the State’s constraints.
Suggestions
The CSR activities suggested in Schedule VII under Section 135 of the Companies Act are meticulously designed in accordance with DPSP articles of the constitution. There are two important actions required to activate development further through CSR: (i) Expanding the list of activities of Schedule VII with a focus on inclusion of the remaining untouched DPSP Articles such as living wage and decent work (Article 43), professional management of cooperative societies (Article 43B), prohibition of intoxicating drinks and drugs injurious to health (Article 47), peace and security (Article 51), and inclusion of fundamental duties (Article 51 A). As an extension of Article 39, there is an urgent need to specifically include the issues of labour reforms and implementation of four labour codes that are directly linked with workers and the business environment (Art 39, 41.43, 43A); (ii) Besides expanding the scope of Schedule VII, the Ministry of Company Affairs or its body like IICA must conduct a decadal impact survey (2013 to 2023) or a national-level impact study of CSR funding on social development in India, especially to highlight its dimensions and directions; increase stakeholders engagement in policy formulation and program implementation; and must revive the National CSR Award.
