Giving Compass' Take:

• Anushka Pinto unpacks the history and problems of India's CSR laws which have broad implications for the social sector in the country. 

• How can funders help to support effective laws around philanthropy and CSR?

• Read more about the new CSR laws. 

Why is the government consistently getting it so wrong in terms of implementing and enforcing India’s Corporate Social Responsibility (CSR) law? The amendments that have been proposed most recently, will dismiss a majority of the country’s three million nonprofits from being recipients of CSR funds. The only entities now eligible for CSR funding will be Section 8 companies and notified government funds; trusts and registered societies seem to be entirely excluded.

Just last August, it was corporations that were bearing the brunt of the then latest amendments, which threatened imprisonment of senior corporate officers for non-compliance. The only thing that is certain when it comes to India’s CSR law is that in the six years of its existence, it has not worked the way it was meant to.

Since the enactment of Section 135 of the Companies Act in 2014, there have been two High Level Committee Reports (2015) (2019), one Company Law Committee Report (2016), and one Legal Sub-Committee Report (2018). There have also been seven General Circulars, five Notifications, four Gazette Notifications, three other Notifications, and a great many Lok and Rajya Sabha questions. All of these have attempted to clarify how the law ought to be implemented, what the intention behind it is, what sorts of mechanisms were to be created to facilitate compliance, and so on.

What is evident is that, over time, there has been a sharp shift in the regulatory approach towards a tighter, more stringent framework, the intention of which is to control—rather than facilitate—compliance. While the merit of such a move can be debated, it is more important to reflect on why and how this shift took place.

Did we opt for a stricter approach because the facilitative one wasn’t yielding results? Are we, as Indians, culturally predisposed to respond only when penalties loom? Or, did we simply not give the softer, more facilitative approach, its proper day in the sun?

Read the full article about India’s CSR laws by Anushka Pinto at India Development Review.