While the Companies Bill, 2011 is still pending in Parliament, the provision on corporate social responsibility (CSR) spending continues to be one of the contentious issues. It is not clear what form that provision will take during the next round of the lawmaking process. The oddity of the CSR proposal in the Indian context is its mandatory nature, which has been somewhat diluted in the 2011 Bill to make it quasi-mandatory or “hybrid” in nature.
Given this situation, a paper titled India’s Mandatory Corporate Social Responsibility Proposal: Creative Capitalism Meets Creative Regulation in the Global Market by Caroline Van Zile looks at the debates in CSR generally, and also its evolution in the lawmaking process in India. The abstract is as follows:
This Comment traces the legislative, socio-political, and legal history of a truly unusual and innovative legislative proposal recently raised in India: mandatory corporate social responsibility (CSR) spending for all businesses. While many commentators criticized the proposal for falling outside of the traditional western conception of CSR, this note suggests that what might seem retrograde or unusual to westernized companies can more productively be viewed as India’s attempt to navigate a difficult divide, unique to BRICS countries. India is under intense pressure from its populace to address growing inequalities and deficiencies in infrastructure; at the same time, it is facing perpetual international pressure to keep its economy highly liberalized, with little taxation. The CSR proposal represents the Indian parliament’s attempt to create a novel policy to serve both goals; such attempts at innovation, which do not simply import western laws or governance regimes, should be encouraged.
This adds to the burgeoning academic literature on CSR in India. See also Directors as Trustees of the Nation? India’s Corporate Governance and Corporate Social Responsibility Reform Efforts by Afra Afsharipour.