4. Communicate and engage.

In Singapore, different companies use different words to understand CSR. For instance, some
firms understand CSR in generic sense, some firms take it as the means of sustainability and
certain firms understands CSR as shared value. However, essence of CSR in Singapore means
'' how organizations and companies voluntarily manage environmental, social and economic
issues to reduce their negative effects and maximize their positive impacts." In Singapore, big
firms running their business responsibly share their wealth with the society and in future,
Singaporean business shall be CSR driven and is expected to follow the principles of the guide
map containing four principles as advocated above.

3.5: Conclusion

CSR is one of the important issues the corporate world does have today. The journey of the
concept of CSR started in 1953 officially with the humanitarian contribution of Howard Bowen
in 1953. After Bowen, Carroll's pyramidal model of CSR was able to generate tremendous
awareness about CSR Practice all over the Earth. It may not be out of place to mention that
every social scientist except Milton Friedan supported the issues concerning CSR. In this
chapter, we tried to offer a sketch of the CSR Practice that is in existence today. It has been seen
that in USA, Canada and European countries, the CSR culture received much greater attention of
the corporations than that of the firms belonging to the third world countries. Australia,
Singapore and China are in forefront in CSR practice than Pakistan, Bangladesh, Sri Lana and
India. However, the degree of CSR practice awareness is a growing trend and perhaps this is a
healthy sign of business practices across the globe. Human rights, labour and ethics are the heart
of any business and no business can sustain and survive without support of them. However,
environmental issues like climate change and environment protection are receiving due attention
besides other issues a business should concern itself. None of us exist if the Earth suffers from
incurable diseases. There is symbiotic relationship between business and society and the
principle of' "live and let live" is applicable to business and society. Almost companies of every
country in the world are becoming conscious about their reasonability towards the society and it
needs little more time for further awareness generation. Many African countries and Asian
countries are still outside the map of CSR practices and economic reasons appear to restrict
them from being CSR practitioners.

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 Chapter 4

CSR-Indian

Framework-Social,

Legal and Economic

Issues

70
 Chapter 4

CSR-Indian Framework-Social, Legal and Economic Issues

4.1: Introduction

India has a long history of involvement of business in social causes which is evident from the
philanthropic practice of Tatas, Birlas, Ambanis, Goenkas who started their businesses in the
status of family owned proprietorship firms and the same evolved into today's big corporate
giants along with continuous metamorphosis that has constantly taken place in the society. The
phrase corporate social responsibility does not appear to be emerged as a new philosophy
guiding the corporations to give back to the society in the form of charity and donation what it
received in the form of factors of production but appeared in the form of Dharmmada called by
the Hindus, the Muslims called it Zakatah and the same called by Shiks as Dashaant and genesis
of the philosophy of Dharmmada, Zakatah and Dashaant are religious laws. The collective effort
of a group of individuals forms an organization and in the similar way the concept of corporate
social responsibility is also roomed in day to day operational philosophy of the corporations
(Baxi & Prasad)153. In ancient times, Rajas and Maharajas used to make charities and donations
to the weaker sections of the society and financially unsound entities. Gandhian Trusteeship
Theory may be considered to be the strong support of the cause of CSR. According to
Gandhiji, the rich should part with their wealth to serve the poor. Gandhiji says, " Supposing I
have come by a fair amount of wealth either by way of legacy or by means of trade and industry,
I must know that all that wealth does not belong to me; what belongs to me is the right to an
honourable livelihood, no better than that enjoyed by millions of others. The rest of the wealth
belongs to the community and must be used for the welfare of the community'' 154. According to
the version of "Altered Images: the 2001 State of Corporate Responsibility in India Poll, a study
conducted by Tata Energy Research Institute (TERI), an evolutionary sketch of CSR in India

153
C. V. Baxi and A. Prasad (2005) explained and elaborated the evolutionary concept of CSR in India in the book,
Corporate Social Responsibility-Concepts & Cases, Excel Books, New Delhi. The substance of the publication is
about the phases of metamorphosis today's CSR has passed through and it enunciated that how the concept of CSR
is deeply embedded in day to day operational routine of the corporations.
154
The Gandhian Trusteeship Theory is self explanatory that advocates the relevance of CSR what is known today

71
may be framed in four approaches or models in chronological order (Poornima, 2011) 155 and
they are briefly presented herein under.

1. Model Based on Ethics (1930s-1950s): This is based on the Gandhian Trusteeship Theory as
explained above. Trusteeship approach argues that business should act as the trustee of the
society and it should manage the wealth in the interest of the society immediately next to self
interest. This approach was able to inspire and motivate many family-owned-businesses to
contribute and donate in order to serve the cause of socio-economic development.

2. State Ownership Model (1950s-1970s): This is based on Nehruvian Theory of Socialism and
Mixed Economy. Pandit Jawaharlal Nehru, the first Prime Minister of independent India used to
believe that responsibility of wealth creation should be substantially in the hands of the State so
that the same can remove disparity in distribution of national income. In other words, Pandit
Nehru used to advocate that private ownership of business is welcome but the State has to
shoulder her responsibility in similar manner so that disparity between haves and have nots can
be removed substantially. Thus, state ownership of the corporations played an important role in
shouldering CSR.

3. Milton Friedman Model(1970s-1990s): Milton Friedman advocated that corporations should

do business in lawful manner and earn profit being the sole motive of the business and out of the
profit so earned, it would to go the society in the form of taxation to the exchequer.

4. Stakeholders Model (1990s- Present Era): Stakeholders interest to be seen vis a vis necessary
profit to be earned by the corporations was the fall out of globalization and liberalization of
national economy in the post globalization era and the present era is also known as stakeholders
age. By late 1990s, Stakeholders Model was fully known to have been accepted by the society
and the business. It may be stated that business houses were convinced that they cannot exist
without taking care of the interest of the stakeholder like, the customers, creditors, governments,
employees etc. More or less 90% of the Fortune 500 companies used to mention their CSR
policy in the annual reports and they started practice in CSR. By and large every corporation
belongs to the league of Fortune 500 companies and they acknowledged that CSR is an
essential constituent of organizational goals and they prominently promoted CSR schemes

Poornima has tried to draw a sketch of Indian CSR philosophy as explained above, in her works.

72
which were reflected in their annual reports (Boli and Hartsuiker)156 . India as the rest of the
world subscribed to the cause of CSR and realized that it is difficult to exist in the market
without serving the socio-economic causes (Bajpai)157.

4.2: CSR-Indian Framework- Social Dimensions

Society is the owner of all the inputs which are converted into outputs by the business that
contains profit and under CSR, businesses are to share this profit with the society in different
forms. India is a country with diverse cultures and traditions that vary from region to region and
province to province but there exists certain commonality in social structure being the unifying
force. Let us offer a bird's eye view of Indian social framework and characteristic feature of
Indian society hereunder.

4.2.1: Caste Based Society

The Indian social structure is based upon the caste system. The society comprises of four major
castes and they are the Brahmans, Kshatriyas, Vaishyas and the Sudras. The Brahmans are the
priests and are considered to be the uppermost caste. The Kshatriyas are the warriors, Vaishyas
are the merchant class and the Sudras are working class. Inter-caste marriages are not permitted
as a custom though it became very common in urban areas. The Constitution of India does not
permit untouchability and those practicing it can be prosecuted by law of the land. Of late, the
caste system is becoming obsolete with growing urbanization.

4.2.2: Family

The family as a unit is given due importance and divorce as a rule is not found to be very
common. Couples prefer adjusting rather than breaking up a marriage which is due to the
importance given to the children. The family system takes care of nurturing the children and their
well-being. However, nowadays, preference is given to divorce as a solution to settle an unhappy
marriage due to modernization based rational thinking of the prevailing society.

156
The authors in their seminal paper (2001), Theory of Corporate Social Responsibility: Its Evolutionary Path and
the Road Ahead, International Journal of Management Review, Vol. 5, pp 34-45 enunciated that CSR was an
indispensible part and parcel of corporate practices and the same was considered to be a motivational force for the
companies to operate in the society.
157
Shri G. N. Bajpai (2001) in his work -Corporate Social Responsibility in India and Europe: Cross Cultural
Perspectives explained that India was not lagging behind in the process of adoption of CSR a regular practice
keeping parity with the global practices. Retrieved from [Link] on 20th September, 2017

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4.2.3: Role of Women

Historically, women have played a significant role in socio-political structure of India. In

ancient times, women were more empowered and used to enjoy more freedom but with advent of
the Muslims, the purdah system came into existence in Muslims dominating regions and areas of
India. In many regions of the country, women remain suppressed and submissive. However, it is
being noticed that with improved education levels, women have become more free in expressing
their thoughts and becoming assertive and this is quite appreciable.

4.2.4: Men

In Indian society, man is considered to be major earning force and bread and butter earners. Men
shoulder the responsibility of the family and he is very dominating by nature and as a tradition
rule over the women and women also accept that in most of the time.

4.2.5: Marriage

Marriage is a social obligatory institution which most Indian adhere to. It is given much
importance by the society. Marriages are generally arranged but in urban areas many are
choosing their partners. Children born outside of marriage are looked down upon. Marriages are
performed with rituals and much money is spent on this occasion.

4.2.6: Patriarchal Set-up

Indian society is mostly a patriarchal set up with father having control over the entire family unit.
He is the head of the family and the oldest male member has ultimate say over matters and
issues concerning the family units.

4.2.7: Matriarchal Set-up

In south India and mostly in Kerala, the women in the house is the dominant force and she has
the ultimate say over the issues concerning the family units. However, wife consults with
husbands but she plays a dominating role in decision making concerning family matters.

74
4.2.8: Birth of Children

Birth of children is rejoiced by the family and it celebrates with reasonable pomp and happiness.
Ceremonies and rituals are held to celebrate the occasion. The birth of a male child is looked up
to and birth of a female child is looked down upon in certain areas of the country though the rate
of such unpleasant situation is declining with educational advancement and enlightenment of
the parents and the family members. The society still suffers from many superstitions and wife is
made sometimes socially responsible for delivering a female child.

4.2.9: Death

This is also an important but unpleasant occasion in the family. Death is inevitable and certain
rituals are performed on the occasion of death in a family. Moreover, yearly rituals are held in
remembrance of the deceased.

4.2.10: Multilingual

India is a country and constituent of thirty states and five union territories and there is unity in
diversity. Each state is more or less is carved out on the basis of language spoken in such state.
There are thousands of local dialects and Hindi and English are the official languages. Northern
part of the country is Hindi dominating by and large and rest of the country practice provincial
and English as the official language. However, Constitution of India recognized Hindi as the
National Language and English as a link language.

4.2.11: Multi-religions

There are five kinds of religions are practiced in India and they are Hinduism, Islam, Sikhism,
Christianity, Jainism and Buddhism. Among the total population, about 80% are Hindus, 14%
are Muslims, 3% Christians, 2% Sikhs, 1% Jains and 1% Buddhists. The country practices
secularism and the same is provided in the Constitution of India too.

4.2.12: Multicultural

India is multicultural society and each community is having its own culture and the same has
historical foundations. Tradition and traditional culture are the twin attributes of Indian society.

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4.2.13: Poverty

Though India has considerably progressed economically after independence but still economic
disparity prevails in India. Thirty percent of total population are living below the poverty line
which is painful for any civilized and enlightened person to see. Poverty is the basic cause of
poor quality of human capital and quality human capital is pre-requisite for socio-economic
development.

4.2.14: Illiteracy

Rate of literacy of India has improved considerably since her independence. Now literacy rate is
by and large 72% which was 19% at the time of independence. Still 28% are illiterate and
illiteracy is a curse to the Indian society. Illiteracy is one of the major hindrances for socio-
economic development of the Indian society.

4.2.15: Ill Health and Poor Sanitary System

Due to low per capita income, Indian society suffers from malnutrition and ill health condition.
The society suffers from non-availability of sanitary infrastructure and poor medical treatment.
Many people die due to non-availability of medical aids since poor people cannot afford to bear
he burden of the costly medical treatments. It is like low per capital income leads to malnutrition,
malnutrition leads to poor health condition and poor health condition leads to untimely death.

4.2.16: Population Explosion

The Indian society is attributed with the problem of high birth rate which leads to population
explosion and 125 billion or more is the current population of India and it is of course alarming.
In order to maintain a rapidly growing population, the need for food, clothing, shelter, medicines,
schooling etc all rise. Rising population imposes greater economic burdens and consequently
society suffers from non economic progress.

4.3: CSR-Indian Framework-Legal Dimension

India maintains a hybrid legal system in the form of a mixture of civil, common law and
customary or religious law within the legal framework emanated from the colonial era and
various legislation introduced by the British and they are still in existence in modified or even

76
ditto forms today. Indian laws also are found to be in adherence to the United Nations Guidelines
on human rights law and environmental law and CSR is directly or indirectly associated with the
implication of such laws. Indian legal system is fairly complex in nature and more so the
personal laws are. Almost each region of the country has its own set of laws and regulations.
More specifically, separate laws govern Hindus, Muslims, Sikhs, Christians and the followers of
other religions. There is common civil law in place in Goa where all religions have a common
law regarding marriages, divorces and adoption. In a recent reformist judgment, the Supreme
Court of India banned the Islamic practice Triple Talaq" meaning thereby divorce by uttering
of the "Talaq" word thrice by the husband and this landmark judgment of the Supreme Court of
India was welcomed by women activists across the country. This judgment was delivered by
3:2 majority Supreme Court Judges whereby it was adjudged that the law of "Triple Talaq'' as
provided by Muslim Personal Law is unconstitutional. The landmark in the history of law of
India was delivered on 22nd August, 2017 by 3:2 majority of a five Judges Bench of the
Supreme Court of India. CSR has a prominent role in reestablishing the destitutes and victims of
"Triple Talaq". According to Wikipedia, as on January, 2017, there were about 1248 laws in
India and it is difficult to ascertain the exact number of laws that are currently in existence in
India since there are both central and state laws too. Ancient India witnessed a distinct tradition
of law. The Arthashastra, dating from 400BC and Manusmriti from 100AD are the major
influential treaties that were considered to be authoritative legal guidance. Let us give an account
of major laws that constitute the foundation of Indian legal framework and legal system.

4.3.1: The Constitutional Law

The Constitution of India which came into being on the 26th January, 1950 is known as the
lengthiest written constitution in the world. The administrative provisions of the Constitution are
taken from the Government of India Act, 1935 to a great extent and other provisions of the
Constitution were taken from different sources and other Constitutions in the world at the time
when it was adopted. The Constitution of India is the genesis of all the India laws and any law
that violates or supersedes the Constitution is considered to be void and ultra vires. Indian
Constitution is federal in character and in this connection , Dr. B. R. Ambedkar, the Chairman of
the Constitution Drafting Committee observed and says, " I think it is agreed that our
Constitution notwithstanding the many provisions which are contained in it whereby the Centre

77
has been given powers to override States nonetheless it is Federal Constitution"158 It contains
details of the administration of both the Union and the States. It codified the Centre-State
relations. The prominent feature of the Constitution is attributed with the Fundamental Rights of
the Citizens and Directive Principles of State Policy. The Constitution provided and prescribed a
federal structure of government and it clearly defined separation of legislative and executive
powers between the Federation and the States. Each State Government is empowered to draft its
own laws on the State Subjects. Laws made by the Parliament of India are binding on thievery
citizen as well as each province of India. The Preamble of the Constitution sets out the main
objectives of the law created by the law makers. Accordingly, the Preamble of the Constitution
declares:" We the people of India having solemnly resolved to constitute India into a Sovereign
Socialist Secular Democratic Republic159 and to secure to all its citizens- Justice, social,
economic and political, Liberty of thought, expression, belief, faith and worship, Equality of
Status and opportunity; and promote among them all; Fraternity assuring the dignity of the
individual and the unity and integrity of the Nation. In our Constitution Assembly this twenty-
sixth day of November, 1949 do hereby, adopt, enact and give to ourselves this Constitution".
Therefore, the Constitution secures Justice-social, economic and political, Liberty-of thought,
expression, belief, faith and worship; Equality of status and opportunity and to promote among
them all Fraternity-assuring the dignity of the individual and unity and integrity of the Nation
and CSR is a highly prominent approach to achieve the constitutional objectives as is contained
in Preamble and explained above.

4.3.2: Criminal Law

The Indian Penal Code formulated and developed by the British Government in 1860 is the
backbone of the Indian Criminal law. The Code of Criminal Procedure, 1973 governs the
procedural of Criminal Law in India. The Code of Criminal Procedure brings the criminals
within the meaning of the Code of Criminal Procedure to justice. It is the main law according to
which criminals are prosecuted in India.

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4.3.3: The Civil Law

The Law of Contract, Labour Laws, Company Law, Law of Tort, Property Law, Tax Laws etc
are the constituents of the Indian Civil laws and all the civil wrong doers are prosecuted under
the Code of Civil Procedure, 1908 subject to the application of the provisions of respective
laws.

4.3.4: Article 21 of the Constitution:

Right to live and livelihood is secured by the provisions contained in the Article 21 of the Indian
Constitution. Article 21 of the Constitution of India is applicable to all persons including tourists
who visit India for the purpose of tour and travel. The term 'life' does have a broad meaning
which was pronounced by Field, J. in Munn v. Illinois, 94 US 11 as " By the term 'life' as here
used something more is meant than mere animal existence. The inhibition against its deprivation
extends to all those limbs and faculties by which life is enjoyed. The provision equally prohibits
the mutilation of the body by the amputation of an arm or leg or the putting out of an eye or the
destruction of any other organ of the body through which the soul communicates with outer
world".

The supreme Court of India pronounced in Chairman, Railway Board v. Chandrima Das, AIR
2000 SC 988 with respect of the tourists also "have right to live, so long as they are here, with
human dignity, just as the State is under an obligation to protect the life of every citizen in this
county, so also the State is under an obligation to protect the life of the persons who are not
citizen."

The referred Article provides that nobody shall be deprived of his life or personal liberty except
according to procedure established by law. The CSR is another version of the Article 21 that
guarantees the protection of life and everybody can live his life with dignity. Initially, Apex
Court was of the view that the Article 21 of the Constitution does not secure right to livelihood.
In Re Sant Ram, AIR 1960 SC 932, the Supreme Court ruled that right to livelihood would not
fall within the expression 'life' and the Apex Court The argument that the Word ''life'' in
Article 21 of the Constitution includes ''livelihood'' has only to be rejected. The question of
livelihood has not in terms been dealt with by Article 21".

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Again, Olga Tellis v. Bombay Municipal Corporation, AIR 1986 SC 180 is the case brought by
pavement dwellers to resist eviction of their habitat by Bombay Municipal Corporation, that the
right to livelihood is born out of the right to life as no person can live without the means of
living, that is, the means of livelihood. The Apex Court observed in this connection:
question we have to consider is whether the right to life includes the right to livelihood. we see
only one answer to that question, namely that it does. The sweep of the right to life conferred by
Article 21 is wide and far reaching. It does not mean, merely that life cannot be extinguished or
taken away as for example, by the imposition and execution of the death sentence, except
according to the procedure established by law. That is but one aspect of the right to life an
equally important facet of that right is the right to livelihood because, no person can live without
the means of living, that is, the means of livelihood.'' Therefore, CSR is a constitutionally valid
theory. Thus, the Article 21 guarantees both right to life as well as livelihood. Life without
livelihood is meaningless and without livelihood it is impossible to protect the life. Therefore, it
is the moral responsibility in terms of the provisions of the Article 21 of the Constitution, to part
the profit of the business for the cause of philanthropy and fulfill the same by doing charities and
donations to secure the right to life and livelihood of the financially weaker section of the
society.

4.3.5: CSR Under the Companies Act, 2013

Section 135 of the Companies Act, 2013 provides for CSR by the companies with certain
capping. According to this section, every company having net worth of Rs. 500 crores or more
or turnover of Rs. 1,000 crores or more or net profit of Rs. 5 crores or more during any financial
year shall constitute a CSR Committee from the Board consisting of three or more directors
including at least one independent director, in order to recommend for discharging CSR activities
for which the company would spend at least 2% of its average net profits of the previous three
years on specified CSR activities and with the enactment of this legislation, India became the
first country in the world to honour CSR spending as prescribed by law of the country.

4.3.6: Consequence of Non- Compliance of Mandatory CSR Provisions

Even after seven decades of independence, India is still a developing country or even under-
developed country. She has been suffering from hunger, poverty, illiteracy, ill-health and

80
malnutrition and in order to mitigate such problems, legislature made it mandatory for the
companies covered by certain caps as enunciated under above paragraph to contribute to the
cause of CSR activities as prescribed by law. The very purpose of section 135 of the Companies
Act, 2013 is to make the companies spend a portion of their profit for the cause of charities and
donation as everybody has the right to life and livelihood according to the Article 21 of the
Constitution. The philosophy of CSR remained confined in 3 Ps that is, People, Planet and Profit.
People relates to fair business practices toward labour, the community and the region where a
firm operates its business activities. Secondly, Planet relates to sustainable environmental
practices and finally Profit refers to the economic value created by a corporation after absorbing
all the cost of factors of production. Now question arises as what is likely to happen to the
companies in case of non compliance of CSR spending. There is specific provision for non-
compliance spending on CSR under the Companies Act , 2013. Section 450 of the Companies
Act, 2013 prescribed for punishing a company or its officers in case where there is no specific
punishment provided for an offence in the Act and it provides , " If a company or any officer of a
company or any other person contravenes any of the provisions of this Act or rules made there
under, for which no penalty or punishment is provided elsewhere in the Act, the Company and
every officer of the Company who is in default shall be punishable with fine which may extend
to Rs. 10,000 and where the contravention is continuing one with a further fine which may
extend to Rs. 1,000 for every day after the first during which the contravention continues."

Therefore, non compliance with CSR spending may attract fine and punishment of the
defaulters as specified in the Companies Act, 2013. The fundamental purpose of mandatory
CSR practice is to bring about improvement in the quality of life of the local community and the
society at large. So CSR is more moral than legal responsibility of the corporations. CSR is about
giving back to the society what the corporations earned in the form of charities and donation so
that a society can sustain economically, environmentally and morally with dignity.

4.4: CSR-Indian Framework-Economic Dimension

Firms incorporated under law are required to produce goods and services to meet the needs of the
society and the gulf between sales revenue and factors cost is profit and the primary motive of
the firms is to earn sufficient profit in order to maximize wealth of the shareholders.
Management, as the agent of the company owners, are obliged to give adequate return to the

81
shareholders and it is the first and foremost duty and responsibility of the managers employed by
the companies. dimension of CSR includes the process of maximizing
earning per share, possess capability to sustain in the competitive business environment and the
firms should operate with efficiency and profit is the ultimate indicator of success of a business
(Carroll)160. It is worth mentioning , however, earning of excessive profit in not in the interest of
the stakeholder (Barnett)161. India is a developing country and she suffers from lot of socio-
economic problems and therefore, CSR practice by the corporations should be in such form and
manner which would support economic strength of the country. Indian corporate organizations
must understand the profile of economic dimensions or environment under which they are to
operate. The characteristic feature of Indian economy has to be kept in view before designing
CSR strategy suitable for India. Economic responsibility of the firms is to primarily earn profit or
profit is the prime concern of the corporations. Economic responsibility of the firms is adjudged
most important and this is in consistency with the advocacy of Milton Friedman. Milton
Friedman advocated that the social responsibility of business is to increase its profit162. As far
as India's CSR framework is concerned with respect to economic dimension, whether profit
should be the main motive of the corporations is of course a debatable issue and the same can be
much more transparent after somebody goes through the features of Indian economy as
enumerated here under.

4.4.1: Low Per Capita Income

India as developing economy is marked by the existence of low per capita income. The per
capita income of an Indian in 2010 was $1,270. Barring a few countries, the per capita income of
Indian people is the lowest in the world. During 1960-80, developed economies grew at faster
rate than the Indian economy but during 1990-2010, Indian economy has grown at a faster rate

160
Economic dimension is one of the components of the pyramid of the corporate social responsibility advocated
by A. B. Carroll in his seminal paper, the pyramid of corporate social responsibility: Towards the moral
management of organizational stakeholders, Business Horizons, pp. 39-48 (1991).
161
M. L. Barnett argues and criticized Carroll's economic dimension of CSR in his paper, Stakeholder influence
capacity and the variability of financial returns to corporate social responsibility, Academy of Management Review,
Vol. 32, pp. 794-816(2007) , that a business should only earn reasonable profit that is necessary to sustain in the
competitive business environment and earning excessive profit may not benefit the stakeholders.
162
Milton Friedman (1970)'work , the social responsibility of business is to increase its profit , was published in the
New York Times Magazine, pp. 32-33, 122, 126 and it earned both appreciation as well as strong criticism for such
advocacy from the social scientists who were proponents against A. B. Carroll's theory of CSR and those who
were supporters of A. B. Carroll.

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than the developed economies. In spite of that, the difference in per capita income between India
and the developed economy is quite large. According to the Word Bank's Word Development
Report 2013, per capita GNI of India is $1,530 against China's per capita GNI $5,740 in 2015
and therefore the standard of living and quality of life India is much at lower side than any other
countries in the world barring few countries like Pakistan, Bangladesh, Sri Lanka etc. According
to the World Bank statistics 2012, Switzerland is at the top of per capita GNI at market prices
which is $82,730 followed by the USA whose per capita GNI at market prices is $50,120, next to
USA is that of Japan with $ 47,870, then comes Germany with $ 44,010 followed by the UK
with $ 38250 and finally China 's per capita GNI at market prices is 5,740 and India is at the
bottom of all of these countries with $1530.

4.4.2: Population Explosion

There is tremendously heavy population pressure on Indian economy. The birth rate in India is
higher than death rate. The annual average rate of growth in population during 2001 - 2011 is
1.64%. The main cause of this rapid growth of population is steep fall in death rate from 49 per
thousand during 1911-20 to 7.4 per thousand in 2008 as compared to this, birth rate has declined
from 49 per thousand during 1911-20 to 22.10 per thousand in 2010. The rapid growth in
population necessitates a higher rate of economic growth in order to maintain a comfortable
level of standard of living of the population. Moreover, need for food, clothing, shelter, medicine
and basic education all rise in order to maintain rapidly growing population.

4.4.3: Labour Intensive Industry

Rise in population leads to an increase in the labour force. According to the 10th Plan, between
2001 and 2007 labour force increased by an annual average rate of 1.8% and this rapid growth of
labour force creates higher supply of labour than its actual demand which leads to
unemployment. Indian industries are labour intensive whereas the capital intensive industries
are found in the developed countries across the globe.

4.4.4: Misdistribution of Wealth

RBI Survey of assets of rural and urban households for the period July 1991 to June 1992 comes
out the existence of sharp inequalities in wealth distribution. In rural areas, 27% of the

83
households less than Rs. 20,000 worth of assets amounts for 2.4% of the total assets. Similarly,
about 24% of the households in the assets range Rs. 20,000-50,000 owned hardly 7.5% of the
total assets. This simply implies that 51% of the bottom line households owned just 10% of the
total assets. As against this, 9.6% of the rich households owning assets worth Rs. 2,50,000 and
above amounts for nearly 49% of the total assets. Thus Indian economy suffers from inequality
in distribution of wealth and assets.

4.4.5: Poor Quality of Human Capital

A noteworthy feature of Indian economy is that it is attributed with poor quality of human capital
as compared to other countries in the world. India suffers from mass illiteracy and illiteracy
retards growth. A minimum level of education is necessary in order to acquire skill and to
perceive the socio-economic problems. Illiteracy rules over the rural areas and they are the
centers of conservatism and superstition. Fatalism and acceptance of misery is the fact of life
and belief in a pre-destined order are the outcomes of illiteracy and is the basic cause of poor
human quality. Poor human quality can hardly contribute to innovation and invention of modern
technology and technical knowhow is then borrowed from other developed countries but that is
also limited in supply. Moreover, borrowed technology cannot serve all-round purpose and its
application is, of course, remained limited and hence full-fledged economic development is
hindered. According to UNDP, Human Development Report, 2013, India is attributed with the
rank of 136 Human Development Index whereas USA is 3, Canda-11, Japan- 10, France- 20,
UK-26, and China is attributed with 101. The Human Development Index is based on life
expectancy, adult literacy, gross enrolment ratio and real GDP per capita which on the basis of
purchasing power parity. Thus, India with the rank 136 in the world has to go a long way to
reach the level of the developed countries. Even China with similar population pressure is much
ahead in terms of Human Development Index than that of India.

4.4.6: Low Level of Living

India fails to provide balanced diets to her people in terms of consumption of requisite calorie
intake. According to world Development Indicators, 46% of the child population in India suffers
from malnutrition. The average protein content of diet of average Indian is 59 grams per day as
against more than double in developed countries. According to the census of 2011, only 36% of

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the households have access to safe drinking water i.e. tap water. As a consequence, it develops
low strength to fight diseases and finally this is also responsible for low level of efficiency of the
Indian labour force.

4.4.7: Lack of Proper Housing

According to the census 2011, only 57% of the households live in permanent houses163 and
about 30% live in semi-permanent houses164 and 13% of the households live in temporary
houses165. The condition in rural areas is much worse where about 40% population lived in
permanent houses and about 60% of the household live in semi-permanent or temporary houses.
Comparatively, the situation in urban areas was much better where 79% household reside in
permanent houses, 16% in semi-permanent and about 5% of the household reside in temporary
houses. Source of this information is census 2011.

4.4.8: Problem of Unemployment

A major development issue concerning India is unemployment and the plans have failed sharply
to accommodate even the skilled and semi-skilled labour force. India failed to provide gainful
employment to millions people who go without work days after days. In 2001-2002, India
recorded incidence of unemployment and underemployment of 9.2%. Economic development in
the sense of rise in real GNP and per capita real income is not of much significant achievement
unless unemployment and underemployment is eradicated. The investment and consequently
expansion of infrastructure i.e. road and highway construction, rural electrification, water supply
and community health scheme in addition to irrigation, power and housing schemes may
generate employment and development activities would contribute to raising agricultural
productivity and income of the poor. Thus CSR as far as economic dimension is concerned has a
great role in bringing about over all socio-economic development and poverty elevation of the
suffering mass of India. Government does not have sufficient resource to shoulder the entire

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developmental responsibilities but it is India corporates which in conjunction with
governmental force can significantly contribute to the socio-economic cause.

4.4.9: Ill- Treatment of Women

Women are devoid of proper treatment of dignity at least in rural areas. Though the situation is
better in urban areas where women are enlightened with education and thus gender exploitation
in urban areas is comparatively lower than that of rural areas. About 50% of the population is
Women and hardly 15% of them are employed in nation building. In developed countries, the
treatment of dignity between man and women is almost equal and both the sexes take part in
nation building in dignified manner . According to the census 2001, about 15 to 20% of the
women population are engaged in various gainful employment and hence contribute to the
growth and development of the country.

4.4.10: Disparity Between Population Size and Resource Availability

It has been mentioned earlier that rapid growth of population badly affects economic
development of the country. With alarming rise in population, per capita availability of land and
resources whose supply is fixed by nature declines. Population rise needs to be checked at any
cost in order to secure rapid economic development. Here lies the role of CSR in imparting mass
literacy and creating awareness among the people about the consequence of population
explosion. Moreover, government should frame policy measures and work together with the
corporations so that mission CSR of the government as is enunciated in the Companies Act, 2013
is smoothly accomplished.

4.4.11: Instability Output of Agriculture Sector

India is ago-based economy and about 70% of her population is dependent on agriculture and
agricultural produce. Indian agriculturists are the worst victims of natural calamities. In some
years they suffer from draught and some year they suffer from floods at least in recent years this
is being observed. Hardly they get comfortable and favourable climatic condition for ideal
agricultural operations. Therefore, corporations have a great role to stand by the agriculturists
and help them obtaining a decent standard of living. CSR has a great role to play in bringing
about quality life among the poor agriculturists.

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4.4.12: Conclusion of The Chapter

This chapter exhibited the social, legal and economic issues concerning CSR-Indian Framework.
Indian CSR framework can be designed in most pragmatic way only when the corporations shall
understand the nitty-gritty of the Indian social system, legal system and of course last but not the
least economic system. An efficient and effective CSR framework can be worked out and CSR
policy may be framed when the corporations shall be interested to make in-depth study of the
nature, characteristic feature and functionality of the Indian socio-economic and judiciary as
well as legal methodology.

CSR is definitely a broad based subject and its domain is comprehensively large and its canvas
should accommodate the social. legal and economic causes. A. B. Carroll 's CSR pyramid give
topmost importance to economic activity followed by legal responsibility, thirdly ethical
responsibilities and finally philanthropic responsibilities. Economic responsibilities include
doing business profitably and what shall be the degree of profitability shall be determined by the
economic dimension of the society under which it exists, functions and sustains. Secondly legal
responsibility includes the obedience to the law of the land. The corporations are to take into
cognizance the legal framework under which they operate. Before, deciding on the issues
concerning CSR framework, it is must to understand the legal framework of the country. CSR is
a philosophy for pondering over the well-being aspects of the society and since business is the
agent of the society to generate wealth, it has to impart certain portion of the same for the
welfare of the society and this is the basic tenet of the CSR theory. It is ethical responsibility of
the corporate to do good for the society since business becomes defunct and non-existent in the
absence of the society. Therefore, society is the cause and business or corporation is effect.
Finally, Carroll says that business should do charity and donations to serve the under privileged
and downtrodden. This is a discretionary responsibility of the corporations. However,
fundamentally, corporations must understand thoroughly the social. legal and economic
environments under which they are to operate before framing CSR Policy. CSR
pyramid is the constituency of four kinds of social responsibilities as mentioned above.

In this chapter, the implications of social dimension, legal and economic dimensions are
discussed and it is argued that the corporations are to make proper assessments of the social
system in terms of those four variables and design their CSR policy. In India, the Companies

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Act, 2013 provides mandatory CSR practice where in other countries it is recommendatory. But,
developed countries do hardly need any legal sanction to do the moral duties. Under developed
countries are more disorganized and subscribe less to the cause of morality and ethical practices
and therefore , result generating law is necessary for strict compliance. In India about 10,000
listed companies are there and almost all of them are expected to be covered under the ambit of
Section 135 of the Companies Act, 2013 which deals with mandatory CSR practice in the
specified areas and the areas covered under social, legal and economic canvas come under such
purview. It is therefore expected that the Indian corporations both domestic and multinationals
shall take care of the issues raised in this chapter before adopting a pragmatic CSR frame work
for India.

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