By Surojit Mahalanobis
NEW DELHI: If business ethics do not catch up with your conscience, then the CAG will. The Comptroller and Auditor General (CAG) has found the Central Public Sector Enterprises (CPSEs) a slow or no-starter in their corporate social responsibility.
At a report of audit on 114 CPSEs tabled in Parliament on May 11, CAG said that during 2010-2011, the period they have completed their audit for, top ten (10) CPSEs did not meet their minimum requirement of their CSR Budget or expenditure. The 10 companies are :
- Airport Authority ofIndia(AAI)
- Rural Electrification Corporation Limited (REC)
- Indian Railways Finance Corporation Limited (IRFC)
- Hindustan Aeronautics Limited (HAL)
- Engineers India Limited (EIL)
- Housing and Urban Development Corporation Limited (HUDCO)
- Mazagaon Dock Limited (MDL)
- Manganese Ore India Limited (MOIL)
- National Fertilisers Limited (NFL)
- India Infrastructure Finance Company Limited (IIFC)
Of them, 58 did not comply with the guidelines of the Department of Public Enterprises (DPE) in terms of minimum CSR budget expenditure. Of the rest the compliance was less than 50% of the budgetary provision.
Of the CPSEs earning profit between Rs 10 to Rs 100 crore the compliance was not encougaing, as 37 of 49 of them did not comply with the DPE guidelines at all.
Of the CPSEs earning between Rs 100 crore to Rs 500 crore, the compliance was equally poor as, 17 of 31 CPSEs failed to comply with the minimum budgetary mandates for spending on CSR.
Only saving grace of CAG report is on the CPSEs earning profit over Rs 500 crore. Four out of 34 failed to comply and the 25 of 34 met the budgetary allocation and spent on CSR even more than 5% of their net profit. Of these 25 CPSEs are the Maharatna and majority of the Navaratna companies.
The above top ten CPSEs are very important for the development of the ruralIndia, the new age development processes and reforms. Ironically these CPSEs have shown miserable irresponsibility in their social behaviour.
According to the norms set in 1992, an MoU has to be signed every year between the DPE and the CPSEs for spending behaviour on CSR during the ensuing fiscal, which means social and environmental sustainability and development have to be carried out in areas the CPSEs are functioning.
During the fiscal 2010-2011, as per the MoU between the DPE and the CPSEs, the enterprises earning net profit over Rs 100 crore were required to spend 3% to 5% of their profit for the CSR.
The CPSEs making profit between Rs 100 crore to 500 crore were required to spend 2% to 3%, subject to minimum Rs 3 crore of their net profit.
For the CPSEs making profit between Rs 500 crore and above, the mandatory budget for the CSR was 0.5% to 2% of their net profit.
The current CSR spending culture in the country is a dampener to the government’s moves to speed up reforms. If this is the behavioural pattern of the government sector PSEs, which can be pulled and made answerable by many laws of the country including the Right to Information Act, people are in the absolute dark about how the private sector is functioning.
CSR is a concept the western world is fast catching up with. With some it has already become a mission for service. Strangely, the idea is yet to gel well with the government sector functionaries and even with a few top private sector industries in India. Probably the concept of Ethics in Business and CSR for sustainable business practices, have not yet been adequately appreciated by these functionaries. (IPA Service)
