India’s new CSR law sparks debate among NGOs and businesses

By Oliver Balch, freelance writer, The Guardian | 

India is the first country in the world to enshrine corporate giving into law. Following a change in company law in April 2014, businesses with annual revenues of more than 10bn rupees (£105m) must give away 2 percent of their net profit to charity. Areas they can invest this money in include education, poverty, gender equality and hunger.

At the time India’s policy-makers said the law would release much-needed funds for social development, while critics warned of a tick-box mentality and efforts at evasion.

Two years on, the arguments remain unresolved. What’s unambiguous is that overall charitable spend by companies has increased. According to independent reports, the private sector’s combined charitable spend jumped from an estimated 33.67bn rupees (£357.5m) in 2013 to around 250bn rupees (£2.63bn) after the law’s enactment.

Some say the change in law is also waking up corporate India to its wider social responsibilities. “The so-called 2 percent law has brought CSR [corporate social responsibility] from the fringes to the boardroom,” argues Bimal Arora, chair of the Delhi-based Centre for Responsible Business. “Companies now have to think seriously about the resources, timelines and strategies needed to meet their legal obligations.”

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