Corporate Social Responsibility in India

Bidyut Chakrabarty

• Publisher: Taylor & Francis
• Year: 2012
• eBook ISBN: 9781136647420
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Presenting an analysis of Corporate Social Responsibility (CSR) in India, this book looks at the unique roots of the concept in India. It examines Gandhi's philosophical moorings that inform India's approach to CSR, and the role of civil society in setting an agenda for championing the rights of the stakeholders. The book goes on to focus on the role of the government in grooming the Indian business to be sensitive of its social concerns.

Drawing on rich empirical data, the book shows that CSR in India cannot be conceptualized in ethnocentric terms. Arguing that it is not about 'the typical Indianness' of the articulation, it emphasizes the point that CSR in India needs to be conceptualized in a wider perspective by taking into account its philosophical roots with reference to the prevalent socio-economic and political context. The book is a valuable contribution to the literature on CSR, and is of interest to scholars of Asian Studies, business and development studies.

1 Trajectory of Corporate Social Responsibility in India

An idea is born out of a given socio-economic and political context. The specific way in which it is articulated is also contingent on the milieu. In this sense, the idea is invariably organic in character, challenging the assumptions defending uncritically the derivative roots of conceptualizations. One however needs to be careful in stretching the argument that the ‘derivative’ discourse is always misleading because ideas get transmitted as well. What is argued here is that ideas may possibly be derivative if one is drawn to their origin; they may not be so if one follows their trajectory, drawing on the prevalent socio-economic and political processes within a context. Conceptually persuasive and intellectually stimulating, such an assumption is perhaps most creative in reconceptualizing corporate social responsibility in India for two important reasons: first, this will help us understand the political economy of the concept that has multiple manifestations largely due to its varied socio-economic and political roots. This validates the assumption that corporate social responsibility is a context-driven idea. And it requires to be understood with reference to the Indian reality shaping the idea in a particular fashion. Second, seeking to fathom the contextual nature of corporate social responsibility, the assumption will also enable us to locate its ideological roots in Gandhian notion of Trusteeship drawing on ‘morality’ and ‘ethics’ in business, the most aspired-to values in the contemporary globalizing world. Taken together, CSR is thus defined as ‘achieving commercial success in ways that honour ethical values and respect people, communities and the natural environment’.¹ In other words, CSR basically entails various specific devices to translate the concerns of the business houses for society to achieve their business goals. This also suggests that the commitment to fulfil CSR obligations is complementary to attaining one of the primary goals of commercial activities, namely, profit-generation. CSR thus entails that ‘business [is] more than just profit seeking entity and [has also] an obligation to benefit society’.² There is nothing ‘unethical’ about making profit provided that part of it is ploughed back into society. What is most critical here is the idea that profit making is not the sole motive of business, but fulfilling the CSR-driven concerns for society also remains integral to commerce. In this sense, CSR is perhaps the most meaningful conceptual category to comprehend how sensitized the corporate houses are toward the key developmental concerns such as the environment, equity, poverty and building of human capacities for sustainable and inclusive growth. India is no exception. Although, historically speaking, philan thropy remains an important influence in Indian business, it would however be wrong to equate philanthropy with CSR, which is far more institutionalized than the former. And also, CSR is usually policy-based and tuned to the long-term objectives of a corporate house while philanthropy may not always be so though one cannot rule out the importance of philanthropy in articulating CSR in present-day India. This chapter is primarily a narrative of the events and processes that had a strong bearing on the evolution of CSR in India. The purpose is to grasp the society-business interface in a historical perspective underlining the processes that remained critical in the evolution of CSR discourse in India. The argument that CSR is basically a contextual response is built on:

1. a thorough analysis of the Constitution of India that sought to fulfil ‘the social democratic’ ideological goals of the nationalist movement,
2. a detailed discussion of the growing importance of civil society and also
3. a critical disposition of the impact of those exogenous factors including global actors/agencies on the Indian socio-economic and political environ ment shaping the articulation of CSR in a creative manner.

CSR in a Historical Perspective

As stated earlier, the Indian articulation of CSR follows a specific historical trajectory in which the importance of individual initiatives can never be undermined simply because of the fact that a significant number of the companies with distinct CSR concerns were introduced into this domain during the nationalist campaign against colonialism. Nationalism might have triggered their concern for the ‘nation’; what sustains their continued support for CSR commitment are ‘their own tradition, culture and management style [which might have come] from the “charismatic” influence of the founders who determine the ethics of business, along with its economic goals’.³ The legacy thus created remains significant even after the transfer of the baton to a new generation. According to Shrisvastava and Venkateswaran, investment in CSR activities is largely due to the recognition that uninterrupted growth and development holds ‘greater promise for new markets and customers for companies’ services and products’.⁴ CSR is not exactly philanthropy, but a well-defined design to fulfil the economic goals of the corporate houses by nurturing the constituencies they are supposed to serve. In this sense, philanthropy may be a one-shot phenomenon while CSR is a sustained corporate activity combining concerns for the society and also profit motive.

As shown by Pushpa Sundar, the first phase of business philanthropy saw a clear shift from ‘charity for purely religious purposes during the pre-industrial period toward a more Western form of philanthropy in the period between 1850 and 1914’.⁵ During this phase, like their Western counterparts, the Indian businessmen donated, rather liberally, for setting up trusts and institutions such as schools, colleges, hospitals, orphanages, widow homes, art galleries and museums. Several leading businessmen including Jamsetji Jejeebhoy, Jamsetji Tata, Dinshaw Petit and Premchand Roychand felt that it was their responsibility to build infrastructure for education, health and art. This phase also witnessed the funding of education abroad for brilliant students by the Indian companies. J.N. Tata established, for instance, the J.N. Tata Endowment ‘to offer scholarships to deserving students for education at universities abroad’. It was unique of Tata to have initiated several welfare schemes for the workers in the Tata-owned factories. For instance, as Lala has shown, J.N. Tata installed ‘a humidifier and water sprinklers in his textile mill in Nagpur in the 1870s – the first in India – and later instituted a pension fund’.⁶ Besides establishing the Indian Institute of Sciences in Bangalore, Tata also formed the Sir Dorabji Tata Trust specifically to create world-class research institutes. This dream of Tata was translated into reality with the establishment of the Tata Memorial Centre for Cancer Research and Treatment, the Tata Institute of Social Sciences and the Tata Institute of Fundamental Research. All these Tata-created public institutions remain as prominent today as ever. There was another way in which the charity mission of the Indian business houses was accomplished. With the formation of several associations to protect their commercial interests and also to pursue their socio-economic mission, it was possible for these business houses to fulfil their philanthropic aims. In other words, these business organizations provided a platform to undertake ‘individual or collective social efforts toward charity’.⁷

During India’s struggle for independence, several important Indian business houses were ‘seized by the aggressive nationalistic desire for achieving an economic miracle and eradicating the ills of backwardness’.⁸ The Indian business houses were driven by ‘the swadeshi spirit’ and ‘economic nationalism’ to go beyond normal business considerations.⁹ There was clearly ‘a nationalist shift’ in the attitude of the Indian big business ‘when the collective is said to have risen above the individual and class interests and led the nationalist movement for political independence from the colonisers’.¹⁰ Their endorsement for the Congress fight for independence was certainly nationalistic, and interest-driven at another level. Because of their close proximity with the Indian National Congress, they, on the one hand, found it easier to challenge their British and other foreign counterparts, and it also helped them, on the other hand, to secure their future once independence was won. As I have shown elsewhere,¹¹ by adhering to the national democratic ideology, the Congress leadership sought to protect India’s economic future. In exchange, Indian businessmen provided financial support to the Congress campaign. This was not philanthropy, but was governed by a quid pro quo logic. The relationship was, in other words, complementary to each other. As evidence shows, Gandhi never hesitated to request G.D. Birla, one of the top Indian businessmen who made a great fortune in jute, to provide financial support as and when it was necessary. On 1 October 1927, Gandhi, for instance, wrote to Birla saying that

[m]y thirst for money is simply unquenchable. I need at least Rs.200,000/- for khadi, untouchability and education. The dairy work makes another Rs.50,000/-. Then there is the Ashram expenditure. No work remains unfinished for want of funds, but God gives after severe trials. This also satisfies me. You can give me as much as you like for whatever works you have faith in.¹²

Birla was generally liberal in releasing funds in response to Gandhi’s request for money. In fact, he was forthcoming in his approach, as is evident in the letter that he wrote to the Mahatma where he categorically stated that ‘whenever you find any particular kind of work impeded for lack of finds, you have only to write to me’.¹³ There is no doubt that the Congress appreciation for the Indian business houses helped the Indian businessmen to avoid labour trouble on many occasions because the Congress leadership always emphasized the cooperation between labour and capital in Indian-owned industries. This logically followed from the Congress objective of protecting Indian industries. The workers’ experiences, however, demonstrated that national industry operated no differently from non-Indian industry in dealing with workers’ demands or in its attitude towards trade unions. Thus the labourers, as Amrita Bazar Patrika commented, ‘find nothing to discriminate between the Bombay mill owners who are Indians and the proprietors of Ludlow Jute Mill at Changail, for instance, who are foreign’.¹⁴ Nonetheless, the Congress leadership always stuck to the nationalist democratic ideology while addressing labour issues.

It is true that labour grievances were, on many occasions, not addressed meaningfully and the nationalist Congress leadership did not pay adequate attention. It is also true that Indian businessmen, like their counterparts elsewhere, never appreciated trade union activities and yet there are innumerable instances in which they were benevolent in giving monetary support for worker-welfare schemes. Mostly they spent money for this purpose to create goodwill among the workers and also to fulfil their religious aim of serving the humanity which would, they believed, please God. By seeking to fulfil their philanthropic mission, Indian business communities undertook several steps which benefited the workers. So committed were the business leaders to the workers’ education within the factory town that they ignored other priorities. G.D. Birla practiced what he characterized as ‘comparative economy’ while giving funds to Gandhi because that would have delayed the construction of a school building in the Hooghly jute mill area. On one occasion, Birla requested that Gandhi accept a meagre amount from him because it was not possible to release as much money as had been asked for. As Birla wrote, ‘I can give more, but for the present I have interested myself in several schemes which I consider good for the country [and] that is the reason for this comparative economy’.¹⁵ This is not an isolated instance. Several Indian business houses were involved in spreading education, especially elementary education, in areas where they had a significant commercial presence. Besides education, Birla spent considerable sums of money on health by providing basic medical facilities for those living in Birla-owned factory towns. Similarly, J.N. Tata, along with his interest in higher education and research in basic sciences, was one of the few Indian businessmen who paid significant attention to building proper hospitals with all facilities. Although these hospitals were built primarily for the Tata workers they served the local community by making these facilities available for everybody in the area.

The above brief discussion underlines the importance of philanthropy in Indian business. Mainly to fulfil their ethical and moral concerns, Indian businessmen agreed to spend a portion of what they earned as ‘profit’ for public welfare. In this sense, they were persuaded also by Gandhian Trusteeship that sought to amicably resolve the contradiction between capital and labour. Drawing on the ideology of national democracy justifying the Congress protection for Indian business houses, Gandhi and his colleagues in the Congress consolidated a strong bond between the Indian industrialists and the Indian National Congress which paid off during the freedom struggle when the struggle for Swaraj was pre-eminent. Given the perennial tension between the industrialists and factory workers, it would be wrong to suggest that Indian workers were not exploited or less exploited. What the discussion demonstrates is the fact that because of their moral and ethical concern for the under-privileged and also possibly for being God-fearing, Indian businessmen willingly spent on selective socio-economic goals for the community. Undoubtedly philanthropic, these steps were forerunners of CSR activities in India. It is therefore not surprising that as early as 1965, while identifying the goal of business in India, it was suggested that

[b]usiness has responsibility to itself, to its customers, workers, shareholders and the community… . Every enterprise, how large or small must, if it is to enjoy confidence and respect, seek authority to discharge its responsibilities in all directions … and not to one or two groups, such as stakeholders or workers, at the expense of the community and consumer. Business must be just, humane as well as efficient and dynamic’.¹⁶

Business in India is not merely selfishly ‘profit-driven’, but is expected to be responsible for public well-being. The goal of business is thus reinvented keeping in view its socio-economic obligations to the community. There is no doubt that philanthropy led to what we understand as CSR today. Philanthropic schemes are usually drawn on individual choice and interests while CSR activities always remain institutionalized. Nonetheless, the importance of philanthropy, though largely individual-based, cannot be glossed over, as the above discussion shows, while reconceptualizing CSR in India. Whether it is the nationalist zeal, or Gandhian Trusteeship or individual inclination for funding schemes for public welfare, the fact remains that CSR in contemporary India is the culmination of a process in which each of these factors is critical in its articulation. This also confirms the assumption that CSR is peculiarly context-specific and thus defying efforts at building ‘universally valid-models’ irrespective of socio-economic and political circumstances.

Indian Constitution and CSR

The aim of those who participated in the making of the Constitution of India was to build ‘a socialistic pattern of society’ in a typical Nehruvian way. Hence, the first task of the Assembly was ‘to free India through a new constitution, to feed the starving people, and to clothe the naked masses and to give every Indian the fullest opportunity to develop himself according to his capacity’.¹⁷ The proposed constitution was therefore seen as ‘a normative measure against which to determine the necessity for future transformation and its direction – both substantially and procedurally’.¹⁸ The idea was expanded further by K. Santhanam, a leading exponent of Nehruvian outlook, who argued that the political revolution which meant independence would remain futile without a social and economic revolution: social revolution was necessary ‘to get India out of medievalism, based on birth, religion, custom and community and reconstruct her social structure on a modern foundation of law, individual merit and secular education’ while economic revolution referred to ‘the transition from a ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Dedication
• Contents
• List of figures and tables
• Preface and acknowledgements
• List of abbreviations
• Introduction
• 1. Trajectory of corporate social responsibility in India
• 2. Corporate social responsibility: articulation of Gandhian Trusteeship
• 3. Corporate social responsibility and small and medium enterprises in India
• 4. Corporate social responsibility and public–private partnership in India
• 5. Corporate social responsibility in globalizing India: the contribution of the Tata Group of Industries, WIPRO and NIIT
• Conclusion
• Appendices
• Notes
• Select bibliography
• Index