Corporate Social Responsibility as Legal Obligation: An Indian perspective

The concept of Corporate Social Responsibility (CSR) as a voluntary or mandatory measure has invited attention of corporate watchers for long. In India, large corporates have generally been contributing to CSR activities on voluntary basis in the form of charities and other initiatives. The industry has been resenting any regulation on CSR spending by the government. The advocates of mandatory form of CSR have, on the other hand, been arguing that if CSR has to make a demonstrable impact on societal needs, it can be done only by legislation. The regulation will also remove differences in understanding of CSR activities and streamline spending on CSR. The Government of India has finally promulgated a legislation mandating 2% of net profit as CSR expenditure by the corporates every year. It makes CSR reporting mandatory though compliance is not mandatory. The corporates are required to constitute a CSR Committee at Board level to help in formulation of CSR policy for implementation by the company. This is a step in the right direction but real key will be its implementation by the administrative machinery. This paper examines various nuances of the issue.