Volume III, Issue VII, July 2014 IJLTEMAS ISSN 2278 - 2540

Evolution of Corporate Social Responsibility in

India
Sawati Nagwan1
1
Ph. D. Research Scholar JJTU, Jhunjhunu, Rajasthan, India

Abstract- CSR referring to way that businesses are managed A. The First Phase: In the first phase charity and
to bring about an overall positive impact on the philanthropy were the main drivers of CSR. Culture,
communities, cultures, societies and environments in which religion, family values and tradition and industrialization
they operate. The fundamentals of CSR rest on the fact that had an influential effect on CSR. In the pre-
not only public policy but even corporate should be
industrialization period, which lasted till 1850, wealthy
responsible enough to address social issues. However the
phases are not static and the features of each phase may merchants shared a part of their wealth with the wider
overlap other phases. Under the new Companies Act, CSR society by way of setting up temples for a religious cause.
will become mandatory for companies with profit of Rs 5 Moreover, these merchants helped the society in getting
crore and more. Companies have specialised CSR teams that over phases of famine and epidemics by providing food
formulate policies, strategies and goals for their CSR from their godowns and money and thus securing an
programs and set aside budgets to fund them. These integral position in the society. With the arrival of
programs are often determined by social philosophy which colonial rule in India from the 1850s onwards, the
have clear objectives and are well defined and are aligned approach towards CSR changed. The industrial families of
with the mainstream business. The programs are put into
the 19th century such as Tata, Godrej, Bajaj, Modi, Birla,
practice by the employees who are crucial to this process.
Singhania were strongly inclined towards economic as
well as social considerations. However it has been
I. EVOLUTION OF CORPORATE SOCIAL observed that their efforts towards social as well as
RESPONSIBILITY IN INDIA industrial development were not only driven by selfless
and religious motives but also influenced by caste groups

E volution of corporate social responsibility in India

refers to changes over time in India of the cultural
norms of corporations' engagement of corporate social
and political objectives.

B. The Second Phase

responsibility (CSR), with CSR referring to way that
businesses are managed to bring about an overall positive
In the second phase, during the independence movement,
impact on the communities, cultures, societies and
there was increased stress on Indian Industrialists to
environments in which they operate. The fundamentals of
demonstrate their dedication towards the progress of the
CSR rest on the fact that not only public policy but even
society. This was when Mahatma Gandhi introduced the
corporate should be responsible enough to address social
notion of "trusteeship", according to which the industry
issues. Thus companies should deal with the challenges
leaders had to manage their wealth so as to benefit the
and issues looked after to a certain extent by the states.
common man. "I desire to end capitalism almost, if not
quite, as much as the most advanced socialist. But our
Among other countries India has one of the most richest methods differ. My theory of trusteeship is no make-shift,
traditions of CSR. Much has been done in recent years to certainly no camouflage. I am confident that it will
make Indian Entrepreneurs aware of social responsibility survive all other theories." This was Gandhi's words
as an important segment of their business activity but which highlights his argument towards his concept of
CSR in India has yet to receive widespread recognition. If "trusteeship". Gandhi's influence put pressure on various
this goal has to be realised then the CSR approach of Industrialists to act towards building the nation and its
corporates has to be in line with their attitudes towards socio-economic development. According to Gandhi,
mainstream business- companies setting clear objectives, Indian companies were supposed to be the "temples of
undertaking potential investments, measuring and modern India". Under his influence businesses established
reporting performance publicly. trusts for schools and colleges and also helped in setting
up training and scientific institutions. The operations of
II. THE FOUR PHASES OF CSR DEVELOPMENT IN the trusts were largely in line with Gandhi's reforms
INDIA which sought to abolish untouchability, encourage
empowerment of women and rural development.
The history of CSR in India has its four phases which run
parallel to India's historical development and has resulted C. The Third Phase
in different approaches towards CSR. However the phases
are not static and the features of each phase may overlap The third phase of CSR (1960–80) had its relation to the
other phases. element of "mixed economy", emergence of Public Sector
Undertakings (PSUs) and laws relating labour and

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environmental standards. During this period the private number of companies throughout their business operations
sector was forced to take a backseat. The public sector and processes. A growing number of corporates feel that
was seen as the prime mover of development. Because of CSR is not just another form of indirect expense but is
the stringent legal rules and regulations surrounding the important for protecting the goodwill and reputation,
activities of the private sector, the period was described as defending attacks and increasing business
an "era of command and control". The policy of industrial competitiveness.
licensing, high taxes and restrictions on the private sector
led to corporate malpractices. This led to enactment of Companies have specialised CSR teams that formulate
legislation regarding corporate governance, labour and policies, strategies and goals for their CSR programs and
environmental issues. PSUs were set up by the state to set aside budgets to fund them. These programs are often
ensure suitable distribution of resources (wealth, food determined by social philosophy which have clear
etc.) to the needy. However the public sector was objectives and are well defined and are aligned with the
effective only to a certain limited extent. This led to shift mainsteeam business. The programs are put into practice
of expectation from the public to the private sector and by the employees who are crucial to this process. CSR
their active involvement in the socio-economic programs ranges from community development to
development of the country became absolutely necessary. development in education, environment and healthcare
In 1965 Indian academicians, politicians and businessmen etc.
set up a national workshop on CSR aimed at
reconciliation. They emphasized upon transparency, For example, a more comprehensive method of
social accountability and regular stakeholder dialogues. In development is adopted by some corporations such as
spite of such attempts the CSR failed to catch steam.
Bharat Petroleum Corporation Limited, Maruti Suzuki
India Limited, and Hindustan Unilever Limited. Provision
D. The Fourth Phase of improved medical and sanitation facilities, building
schools and houses, and empowering the villagers and in
In the fourth phase (1980 until the present) Indian process making them more self-reliant by providing
companies started abandoning their traditional vocational training and a knowledge of business
engagement with CSR and integrated it into a sustainable operations are the facilities that these corporations focus
business strategy. In the 1990s the first initiation towards on.Many of the companies are helping other peoples by
globalization and economic liberalization were providing them good standard of living.
undertaken. Controls and licensing system were partly
done away with which gave a boost to the economy the On the other hand, the CSR programs of corporations like
signs of which are very evident today. Increased growth GlaxoSmithKline Pharmaceuticals’ focus on the health
momentum of the economy helped Indian companies aspect of the community. They set up health camps in
grow rapidly and this made them more willing{Gajare, tribal villages which offer medical check-ups and
R.S. (2014). A conceptual study of CSR development in treatment and undertake health awareness programs.
India. In D.B. Patil & D.D. Bhakkad, Redefining Some of the non-profit organizations which carry out
Management Practices and Marketing in Modern Age health and education programs in backward areas are to a
Dhule, India: Atharva Publications (p. 152-154).} and certain extent funded by such corporations.
able to contribute towards social cause. Globalization has
transformed India into an important destination in terms
Also Corporates increasingly join hands with Non-
of production and manufacturing bases of TNCs are governmental organizations (NGOs) and use their
concerned. As Western markets are becoming more and
expertise in devising programs which address wider social
more concerned about and labour and environmental
problems.
standards in the developing countries, Indian companies
who export and produce goods for the developed world
need to pay a close attention to compliance with the For example, a lot of work is being undertaken to rebuild
international standards. the lives of the tsunami affected victims. This is
exclusively undertaken by SAP India in partnership with
Hope Foundation, an NGO that focuses mainly on
III. CURRENT STATE OF CSR IN INDIA
bringing about improvement in the lives of the poor and
needy . The SAP Labs Center of HOPE in Bangalore was
As discussed above, CSR is not a new concept in India. started by this venture which looks after the food,
Ever since their inception, corporates like the Tata Group, clothing, shelter and medical care of street children.
the Aditya Birla Group,and Indian Oil Corporation, to
name a few, have been involved in serving the
CSR has gone through many phases in India. The ability
community. Through donations and charity events, many
to make a significant difference in the society and
other organizations have been doing their part for the improve the overall quality of life has clearly been proven
society. The basic objective of CSR in these days is to by the corporates. Not one but all corporates should try
maximize the company's overall impact on the society and
and bring about a change in the current social situation in
stakeholders. CSR policies, practices and programs are
India in order to have an effective and lasting solution to
being comprehensively integrated by an increasing
the social woes . Partnerships between companies, NGOs

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and the government should be facilitated so that a In the case of Walmart. A month after the disaster, it
combination of their skills such as expertise, strategic refused to sign on to the safety measures adopted by more
thinking, manpower and money to initiate extensive social than a dozen European firms. Those companies, including
change will put the socio-economic development of India H&M, Carrefour and Marks & Spencer, backed a plan in
on a fast track. which they agreed to have rigorous, independent
inspections of the factories they contract with in
IV. CORPORATE SOCIAL RESPONSIBILITY Bangladesh and to help pay for improvements in building
MANDATORY FOR CORPORATES FROM APRIL 1 safety. Gap, too, has been particularly vocal in its
opposition to the initiative. The world's third-largest
apparel company says it supports much of the plan, but
Under the new Companies Act, CSR will become
has suggested a change to it that would significantly
mandatory for companies with profit of Rs 5 crore and
restrict any legal liability for a company that violated it.
more, said Bhaskar Chatterjee, director general and chief
(Gap did not use workshops in Rana Plaza. Walmart has
executive officer of the Indian Institute of Corporate
Affairs, Ministry of Corporate Affairs. Chatterjee said: said that no authorized Walmart production occurred
"CSR, which is made compulsory under the Companies there, but one of the factory's workshops, Ether Tex, listed
the retailer as a customer on its website.) Walmart and
Act and was passed by parliament, comes into effect from
Gap, along with other retailers and the main retail
April 1, 2014,"
federations, are forging their own plan to promote safety
in Bangladesh's apparel industry. This effort will seek to
"All companies with turnover of Rs.1,000 crore and more "develop and implement a new program to improve fire
- or a net worth of Rs 500 crore and more or net profit of and safety regulations in the garment factories of
Rs.5 crore and more - will have to spend at least two Bangladesh," according to the Bipartisan Policy Canter,
percent of their three-year average profit every year on the non-profit group that is spearheading the plan.
CSR activity," he said.
Despite their high-profile -- and widely criticized --
Nearly 150 environment, CSR professionals and experts resistance to the originally proposed safety measures,
are attending the two-day meet organised by a Delhi- Walmart and Gap would no doubt be quick to cite their
based non-governmental organisation Greentech initiatives in other areas: Gap is often considered an
Foundation in support with the Indian Institute of industry leader in CSR, and both companies have
Corporate Affairs. "From April 1, all 16,245 registered proclaimed themselves as champions of efforts promoting
companies have to nominate three members for their CSR women. To some, the companies' rejection of the
committee from their board. Companies cannot do European plan -- while also touting these kinds of social
whatever they want and claim it as a CSR activity programs -- appears contradictory, even hypocritical. A
according to the new law," Chatterjee said. "Under the cynical view might be that when firms trumpet their
new rules coming into effect, anything done the efforts to produce organic foods, sell fair-trade T-shirts or
employees is not CSR, it is a human resource activity. just make the world a better place, they are diverting
Compliance with any rule or regulation is not CSR. attention away from the more unseemly elements of their
Companies should take up this role and voluntarily do it business strategies -- such as polluting the air,
beyond the rule," he said. manufacturing goods in unsafe factories or exploiting
workers with low wages. "You can look at the ways in
"Any activity done must have been the part of the CSR which companies selectively engage with certain CSR
policy of the company which must also be made available issues as being hypocritical, sure, but at the end of the
on the company's website. CSR must be conducted by day, as a company, you can't put money into everything,"
professional implementation using implementing says Americus Reed, professor of marketing at Wharton.
agencies," Chatterjee pointed out. He added: "The project "Rational decisions are being made. It's not a conspiracy
should have a starting time and an ending time. Any or manipulation."
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[8] R.H. Gray, D.L.Owen & K.T.Maunders, Corporate Social

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