Business Law & Applications (PE603) Assignment

Business Law & Applications (PE603)

Assignment On

CSR is not a new concept in India

IN PARTIAL FULLFILLMENT OF THE DEGREE OF

Masters of Business Administration-Intelligent Data Science (MBA-IDS 2018-2020)

Submitted To Submitted By
Dr. S N Ghosh Sakshi Nijhawan
MB18GID247

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Business Law & Applications (PE603) Assignment

CERTIFICATE
This is to certify that this assignment has been prepared by Sakshi Nijhawan (MB18GID247) as a
part of “Business Law & Applications (PE603)” course work in partial fulfillment of the degree
of MBA-IDS at NIIT University, Neemrana, Rajasthan.

Date: 24th October 2019 Signature & Seal

Place: Greater Noida ……………………

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Business Law & Applications (PE603) Assignment

ACKNOWLEDGEMENT

I would like to express my sincere and special thanks of gratitude to Dr. S N Ghosh, for being an
excellent mentor for helping me learn skills and techniques through various methods and
techniques in order to understand and apply Business Law & its applications towards a particular
situation and in the organization.

Your teaching style with lots of situations and examples made this journey extremely amazing and
wonderful. Knowing about how business is impacted by various laws have never been this fun and
interesting ever. Your class, case studies and the assignment, everything was really amazing.
Doing all of this was a stress buster in the middle of all the office work pressure that we are in!

I would also like to thank you for all your constructive comments, helpful answers and also for
giving us your guidance and valuable insights in different situations. Sir, we are sure all of us have
learnt a lot from you.

At last, I would also thank our institution NIIT University, Neemrana for supporting us with the
infrastructure without which this learning would have been a distant reality.

Thank you so much!

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Business Law & Applications (PE603) Assignment

Table of Contents

What is CSR? ................................................................................................................................................ 5

CSR in India .................................................................................................................................... 6
Is CSR a new concept in India? ...................................................................................................... 7
CSR in 20th Century .................................................................................................................. 10
CSR in Current Scenario ........................................................................................................... 11
Conclusion .................................................................................................................................... 12
References ..................................................................................................................................... 13

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Business Law & Applications (PE603) Assignment

What is CSR?

While there may be no single universally accepted definition of CSR, the effect that companies
have on society at large and their social aspirations are underpinned by each definition that
currently exists. The CSR definition has grown internationally and now incorporates all related
principles such as triple bottom line, corporate citizenship, philanthropy, strategic philanthropy,
mutual interest, corporate sustainability and corporate responsibility. Some of these definitions
are:
The EC defines CSR as “the responsibility of enterprises for their impacts on society”. To
completely meet their social responsibility, enterprises “should have in place a process to integrate
social, environmental, ethical human rights and consumer concerns into their business operations
and core strategy in close collaboration with their stakeholders”.
According to WBCSD, “CSR is the continuing commitment by business to contribute to economic
development while improving the quality of life of the workforce and their families as well as of
the community and society at large.”
UNIDO mentions CSR as “a management concept whereby companies integrate social and
environmental concerns in their business operations and interactions with their stakeholders. CSR
is generally understood as being the way through which a company achieves a balance of
economic, environmental and social imperatives (Triple-Bottom-Line Approach), while at the
same time addressing the expectations of shareholders and stakeholders. In this sense it is
important to draw a distinction between CSR, which can be a strategic business management
concept, and charity, sponsorships or philanthropy. Even though the latter can also make a
valuable contribution to poverty reduction, will directly enhance the reputation of a company and
strengthen its brand, the concept of CSR clearly goes beyond that.”
Based on above definitions, it’s evident that:
1. The approach to CSR is comprehensive and aligned with the core business plan to tackle
corporate social and environmental impacts.

2. CSR should discuss the welfare of all stakeholders, not just the owners of the company.

3. Philanthropic programs are only part of CSR, which is otherwise a much broader collection
of activities involving strategic business advantages.

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Business Law & Applications (PE603) Assignment

CSR in India
CSR has historically been regarded as a philanthropic practice in India. And it was an event that
was conducted but not deliberated in keeping with the Indian tradition. As a result, specific
incidents related to this theory are limited in documentation. What was clear, moreover, was that
much of this had encapsulated a national character within it, whether it funded institutions to
participate actively in India's freedom movement, or rooted in the principle of trusteeship.
As some analysts have pointed out, CSR practice in India remains within the philanthropic domain,
but has moved from institutional building (educational, research and cultural) through various
projects to community development. However, with international interests and societies becoming
more involved and demanding, there seems to be a discernible trend that, while CSR remains
largely limited to community development, it becomes more strategic in nature (i.e. engaging with
business) than philanthropic in nature, and a large number of companies publish on their official
websites, annual reports, conservation reports and even CSR reports in this field.
The Companies Act, 2013 has put the idea of CSR at the forefront and is promoting greater trans
parency and reporting through its disclose-or-explain mandate. Schedule VII of the Act, which
outlines the functions of the CSR, indicates that the priority should be on communities. On the
other hand, the draft rules suggest that CSR needs to go beyond communities and beyond the
concept of philanthropy by discussing a company's relationship with its stakeholders and
integrating CSR into its core operations. It will be interesting to observe how this will translate
into action at ground level and how a change is set for the understanding of CSR.

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Business Law & Applications (PE603) Assignment

Is CSR a new concept in India?

Corporate Social Responsibility has been a part of Indian culture since time immemorial. Whether
it was the factories that invested in the communities around them which reduced reliance on
migrant workers and had happy families and therefore happier staff, or entrepreneurs who gave
back to their communities or causes close to their hearts, or foundations that were built to bring
communities together, or a whole host of other means by which we were provided back to society
by companies in some shape and another. In most cases, these were known as benevolent or
philanthropic acts, or the holders who give back to society.
Corporate Social Responsibility requires a company or group of entities to take full account of its
impact on all stakeholders and the environment while making corporate decisions. Manu Smriti
also leads us to one of the most important principles that says, “A person should never seek to
gain or secure wealth through banned pursuits.” We consider that ancient texts such as Manu
Smriti address in depth the nature of the work to be done by individuals, including business
organizations, and state that whatever is good for society is also good for the company in the long
term.
Manu Smriti also clarifies the question of whether or not businesses should be interested in CSR
activities by claiming in his text that: many people say that accumulating wealth on its own will
do well for any human society. Others announce that the fulfillment of human desires and the
acquisition of wealth is ideal and must be met by all individuals. There are others who say that
dharma or moral code of conduct is enough, and there are others who claim that accumulating
riches alone is enough. But the one who maintains the balance between earning wealth and the
right code of conduct is the right one among them. According to the above text, therefore, Manu
Smriti notes that businesses should ensure that they are not only considerate of money, but that
they should also take care of the means used to make that profit. Wealth gained by breaches of the
drama rule is not a healthy wealth and should be dismissed. The above text therefore demonstrates
the importance of CSR in any business organization's work.
Also in Islam we can find clear emphasis on the CSR theory. Islam sets the code of ethics for the
communities of business corporations and businesses, Fair Trade, honoring covenants, and free
competition are few essential elements to be practiced by business corporations. Zakah (AL
Zakah) is one of Islam's five basic principles and, according to the Quran, its observance separates
true believers from mere nominal Muslims. According to Zakah's rule, when a Muslim has enough
to cover his and his family's essential needs for over a year, he is in possession of the Nisab. If he
has more wealth than he is compelled to give, then he is compelled to pay the excess for Zakah.
The importance God put on Zakah in the Quran indicates how deeply Islam is related to CSR. It is
also expected that even the companies will pay Zakah. Zakah is due on each lunar year's passage.
AL Zakah is almost identical to the definition of the mandatory CSR donation, but the only

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Business Law & Applications (PE603) Assignment

difference is guiding force, for later the guiding force is of a legal nature and for AL Zakah the
guiding force is of a religious nature.
Moving to Hindu religious texts, if we refer to Vedic literature, we find a noteworthy reference to
important terms such as 'Sarva loka hitam ', which means ' stakeholder well-being'. This shows
stakeholders' importance to any individual, including any artificial body such as corporations.
Kautilya in Arthasastra also claimed that happiness can not be attained by riches or gain alone,
but only by doing things correctly and doing things correctly, i.e., by sukhasya mulam dharma.
Kautilya also argued that there should be no self-interest, happiness and joy for a leader (king).
His fulfillment resides in his people's welfare (happiness). The same advice can also be found in
the Mahabharata's Shanti Parva, where public interest (welfare) precedes the desires of the king.
So if we look at business organizations as a leader or ruler, they are supposed to support others
and be active in society's welfare.
Hindus merchants provided alms, temples and night shelters for the lower class. Hindus practiced
Dharmada where a specific amount was paid by the purchaser by the producer or seller that was
used for charity. The amount was referred to as the sum of charity or dharmada. Sikhs are pursuing
Daashaant in the same style.
The very basis of modern corporate-level CSR activities is our rich ancient experience and culture.
Our Upanishads, Puranas and Vedic literature such as Ramayana, Mahabharata, and Bhagavad
Gita trace the roots of CSR.
One such example is quoted in Bhagwat Puran where king Bali is advised by Sukhracharya
against giving away all his wealth and recommend splitting one’s fund into five equal parts, which
are:
1. Dharma (daan),
2. for Yash (public works),
3. for generating more wealth by reinvestment,
4. for “Kaam” (material enjoyment), and
5. For family and friends.

In addition to this, Bhagavad Gita have splendidly explained the meaning and importance of
Dharma. Before discussing about Dharma, it is imperative to know that social responsibility is
majorly divided into four parts: Global Social Responsibility (GSR), Corporate Social
Responsibility (CSR), Individual Social Responsibility (ISR) and Personal Social Responsibility
(PSR). Bhagavad Gita, a verbal exchange between Krishna and Arjuna has included in it four
forms of Dharma, namely Rita Dharma, Varna Dharma, Ashrama Dharma, and Swa-Dharma,
connected to the strands of Social Responsibility.

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Business Law & Applications (PE603) Assignment

Dharmas and Social Responsibility

Rita Dharma is a dharma to the universe, which means that wherever you go in the universe, you
must respect and obey the rules and regulations of the physical world. This says that it is the
greatest responsibility of any person or organization to look after the world and not just the planet-
Earth. Global Social Responsibility, on the other hand, applies to public responsibility. In today's
world, accountability towards the globe remains with only a few organizations such as NASA,
ISRO, and ESA etc. Their duty is to take care of every aspect of the universe. Second, we have
Varna Dharma describing / explaining the obligation of an institution to the country, community,
and industry. This dharma can be linked directly to CSR that also refers to the well-being of all an
organization's stakeholders.
In short, the idea of "dharma" and "karma" from Vedanta gives an inward approach to CSR.
According to the old saying, one should save one's wealth from future calamity and not think "what
a rich man of calamity has to fear?" Because even the accumulated stock dwindles back when
capital starts to forsake (Chanakya Niti-Sastra).
Here, we can also understand that the history of CSR in India is similar to the historical
development of India. CSR has evolved in phases such as community engagement, socially
responsible development, and socially responsible employee relationships. CSR has developed in
India through various phases such as community engagement, socially responsible development,
and socially responsible employee relationships. The history of Corporate Social Responsibility in
India can therefore be narrowly divided into four phases.

PHASE 1 (1850-1914)
CSR's first phase is renowned for its charity and philanthropic nature. CSR, as well as
industrialization, was driven by family values, customs, culture and religion. Through setting up
temples and religious institutions, businessmen's money was spent on the welfare of society. Such
merchants opened their granaries to the poor and hungry in times of drought and famine. This
approach to CSR underwent a significant change with the end of the colonial era. The pioneers of
industrialization, names like Tata, Birla, Godrej, Bajaj, promoted the concept of CSR in pre-
Independence times by establishing charitable foundations, educational and health care
institutions, and community development trusts. Social benefits during this time are driven by
political motives.

PHASE 2 (1910 TO 1960)

The second phase took place during the independence movement. Mahatma Gandhi encouraged
wealthy industrialists to share their wealth and help the poor and marginalized in society. Socio-
economic growth was supported by his idea of trusteeship. According to Gandhi, businesses and

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industries are the "temples of modern India". He influenced industrialists to set up trusts for
colleges and institutions for research and training. These trusts have engaged in social reform, such
as women's rural development, literacy, and empowerment.

PHASE 3 (1950 TO 1990)

This phase was characterized by the advent of PSUs (Public Sector Undertakings) to ensure better
distribution of wealth in society characterized this process. The policy on industrial licensing and
taxes, as well as restrictions on the private sector, resulted in corporate malpractice that ultimately
triggered appropriate corporate governance, labor and environmental legislation. Since the success
rate of PSUs was not significant, there was a natural shift in public-private-sector priorities, with
the latter being actively involved in socio-economic development. In 1965, scholars, politicians
and businessmen held a national CSR workshop where social responsibility and transparency were
given a great deal of focus.

PHASE 4 (1980 Onwards)

CSR was described as a sustainable business strategy in this last phase. Together with a relaxed
licensing system, the surge of liberalization, privatization and globalization (LPG) led to a boom
in the country's economic development. This also led to an increased acceleration in industrial
growth, allowing businesses to commit more to social responsibility. What started as charity is
now understood and accepted as responsibility.

CSR in 20th Century

Because of the removal of trade barriers and foreign investment restrictions, FDI has grown
enormously over the past few decades, particularly in developing countries. Since 1970, when
there were only 7,000 transnational corporations (TNCs), we have witnessed a major change in
the number of the Transnational Corporation. By 1994, there were 37,000 TNCs with more than
200,000 affiliates worldwide. The presence of multinational companies in different countries,
combined with advances in technology and communication, have played an important role in
dramatically reducing investment costs in any part of the world, especially in developing countries
known for their cheap labor, easily available raw materials and other natural resources. Many other
states ' business entities are trying to exploit these conditions that are essential to their business
flourishing. Industries also face a dilemma about maximizing profits and taking social
responsibility when making corporate decisions about production, service delivery.
The rise in the number of TNCs and their power posed a major challenge for the states and their
peoples. It is also perceived as a major threat to causes of human rights. Sometimes TNCs have a

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greater financial influence than national economies. An instance can be General Motors and
Mitsubishi whose annual sales is more than double the GDP of Hong Kong or Israel.
CSR was viewed as philanthropy, welfare, and social-giving in the 20th century. But at the end of
the 20th century, the CSR idea was developed as a model of sustainable business. Many firms took
up issues of their respective interests and began investing in them. We also find a remarkable
emphasis in this period on elementary education.

CSR in Current Scenario

Companies such as Tata, Reliance, HCL and other global / multi-national companies have now
introduced numerous CSR programs for society welfare. It's very important for a company to take
any social action. But, considering society while undertaking any action is also relevant for a
person. As shown in Bhagavad Gita, there are four Ashrama stages such as Brahmacharya
(student); Grihastha (householder); Vanaprastha (elder advisor) and Sanyasa (religious solitaire).
Following the guidelines in all four stages of life is crucial for an individual. Ashrama Dharma can
therefore be directly linked to ISR because it positions an individual's individual responsibility in
his / her entire life. Finally, we have Swa-dharma, which applies to a self-referring dharma. This
is the basic aspect of social responsibility as it contributes to an individual's self-development.
Hence, it is called Personal Social Responsibility.
In the current scenario, the new companies act amended in India in December 2012 mandates the
corporation to spend 2 percent of their average net profits towards CSR over the past three financial
years. It applies to companies with a turnover of 1000 Cr / PAT of 5 Cr / or a gross turnover
of 500 Cr. The new law replaces the 1956 Act of the Companies and stresses the continuity of the
CSR agenda.

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Business Law & Applications (PE603) Assignment

Conclusion

CSR principles have shown their significant presence in virtually all religions' old religious text.
The idea of CSR has been stated in these texts on many occasions, though in a subtle or indirect
way. There is, however, no place where we can find explicit mention of the words corporation,
company, corporate social responsibility. We find that the main development of the CSR concept
took place in the 19th century and it gradually began to consolidate and clarify the concept. An
attempt to cultivate civic virtue in corporations was the philosophy driving CSR discourses from
the 1950s onwards. The emphasis in the 1980s was more on CSR as a responsibility ("doing good
to be great"). The idea later began to flourish with the idea of ' doing good to do well ' as a corporate
strategy. After 1990, we find the concept of CSR as a business strategy and a way of doing
sustainable business took full shape.
CSR is not viewed by religious texts as a duty or as a tool of business profit. CSR went beyond
just charity and donations in India. It is now an important part of the corporate strategy.
Organizations have specialist CSR teams designing specific policies, tactics and priorities for their
CSR projects and setting aside budgets to sustain them. CSR has become increasingly prevalent in
the Indian corporate scenario as companies have realized that, in addition to growing their
businesses, it is also very important to build goodwill, confidence, and further sustainable
relationships with the society as a whole, without which the enterprise cannot develop sustainably.
With several view points from ancient times and even recent, it is clearly evident that CSR is not
a new concept in India!

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References

1. http://ijldai.thelawbrigade.com/wp-content/uploads/2016/03/kuhumita.pdf
2. https://indiacsr.in/csr-is-not-a-new-concept-in-india/
3. https://www.pwc.in/assets/pdfs/publications/2013/handbook-on-corporate-social-
responsibility-in-india.pdf
4. http://finance.bih.nic.in/Documents/CSR-Policy.pdf
5. https://www.curiouskeeda.com/business/csr-really-new-concept-india/

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