45. History of CSR in India: From Charity to Responsibility

Source: Hire4Event

The India culture is rooted in the belief of caring. The term CSR is not new to India. In a way, the history of CSR activities in India runs parallel with the history of the country.

The early CSR activities in India can, in fact, be traced to the ancient times. Indian inscriptions and scriptures mentioned the importance of sharing one’s earning with the poorer sections. For instance, a particular phrase in Rig Veda (5-60.6) talks about the need for affluent people in the society to give back to the society in some way for social development. Although ‘corporate houses’ did not exist at those times, phrases like these captured the very essence of modern CSR activities. Similarly examples can be cited for ancient texts like Manu Smriti. The idea of ‘Sarva loka hitam’, which translates to well being of all, is a notable mention among the Vedic literatures. Later, even Chanakya had specified the importance of ethical practices while conducting business.

Religion particularly played an important role in promoting the concept of CSR in earlier times. As such, we have examples of Zaakat(charity to the needy) in the Islamic Laws, the Dharmada in Hindus and Daashant by the Sikhs.

Modern day CSR activities in India can be rooted to the pre-independence era where the concept manifested itself through charities carried out in the form of construction of educational and healthcare institutions, by businessmen such as the Tatas and Birlas. During the independence movement, Mahatma Gandhi urged powerful industrialists and Indian companies, whom he referred to as the “Temples of Modern India”, to share the benefit of their wealth with the deprived sections of the society.

After independence, we saw the emergence of Public Sector Undertakings. These PSU’s were expected to play an important part in the development agenda. However with the economic liberalization of the Indian economy in the 1990s, we see a major shift in the nature of CSR activities. With the economic growth of the countries, companies were able to contribute more towards CSR activities. The charity was not considered as a responsibility. The entry of global powers in the Indian scenario due to globalization led to a competition in the local powers to respond to the needs of consumers, and to enhance their brand value. This led to the Indian government to pass the Companies Act in 2013, which made India the first ever country to mandate and quantify CSR expenditure. Companies of a turnover of 1000 Cr/PAT of 5 Cr / or net worth of 500 Cr are mandated to spend 2% of their average net profits towards CSR.

Today, Indian companies have contributed to social development in the areas of education, skill development, healthcare, rural development, environment among many others. It is an important part of a companies strategy and many Indian companies have specialized teams that is responsible for CSR. Thus, CSR in India today is not just charity, it is a responsibility.