More than 1 million companies are registered with the Ministry of Corporate Affairs, wherein the private limited enterprises are almost 10 times in number as compared to public limited firms. As per the RBI, growth in gross profits of the Indian corporate sector was 22.2 per cent during 1991-92 and 17 per cent during 2000-2006.
Herein, the most vital piece of information is that retention of profits enhanced at the rate of 10 percent during 1990s and further bounced to more than 60 per cent during 2000-2006.
On the contrary, the rural parts of India and the dwellers therein are on the verge of losing even what they have presently. Roads, schools, universities, toilets, environment, drinking water, and health are some of the concerns which seem endless and unrecoverable.
The corporate sector, which largely depends on resources, be it the men, natural resources, production, or consumption from these rural parts, rarely care for the development of such areas.
What kind of prosperity and opulence do people talk about when on one hand the riches sleep in centrally air-cooled bungalows, while on the other women in villages approach farms for bathing and defecating? Let me tell you that almost half of the Indians do not have access to lavatories.
Linking corporate success with the much-needed rural and social betterment is undeniably the most crucial work. A brave step was the addition of obligatory Corporate Social Responsibility norms in the new Companies Act 2013.
Every company, be it private or public, surpassing the pre-determined limits of net worth/ turnover/ net profits, now has to contribute towards social advancement by setting aside at least 2 percent of average profits of preceding three financial years. Considerable to note, as per the CAG report five out of ten PSU's did not apply even a penny on CSR ventures, though were required to do so under the law of the land for the FY 2011-12. Same is the case with private companies, which if not corrected, will serve no purpose.
I have formerly talked about setting up of a statutory body that should be entrusted with the task of applying CSR funds of the public sector companies to well being programmes. Herein, private firms will also have to be encompassed. Either the government should add a new clause by which private players must be directed to credit the CSR fund to such statutory body, which in turn will make sure that the amount is applied timely and scrupulously to CSR events.
Else, partnership of private firms and statutory body in the ratio 75:25 must be made a rule so as to undertake quick CSR activities. Identification of workable CSR projects and outlay of funds should be capably handled by the statutory body comprising of skilled and proven specialists.
The new government at the center will have to rethink the current CSR norms with a view to permeating firm binding effect in the law. The Audit Report of CAG reveals the fact that none of the corporates, be it the PSUs or the private firms, are willing enough to undertake the social responsibility task.
To make sure that the CSR fund, which would go as high as thousands of crores, is pooled and then utilized for actual social welfare, the MCA has to look forward to establishing a statutory body with autonomous members holding requisite expertise of running welfare programmes.
Beyond assuring that the money is expeditiously spent on real ventures, the measure will also ensure that embezzlement of CSR fund by the corporates is curbed.