Role of CSR in Addressing Inequalities of Human Development Indices
Praveen Nayak & Dr. Preeti Patil
Praveen Nayak is Principal, Vivekanand Institute of Management, Kalaburagi.
Dr. Preeti Patil is Assistant Professor, Department of Business Studies, VTU PG Centre, Mysuru.
They can be reached at praveen16176@gmail.com and eboard@icai.in.
Richard J. Estes observes ‘World social development has arrived at a critical turning point. Economically advanced nations have made significant progress toward meeting the basic needs of their populations; however, the majority of developing countries have not. Problems of rapid population growth, failing economies, famine, environmental devastation, majority-minority group conflicts, increasing militarization, among others, are pushing many developing nations toward the brink of social chaos’. Desire to addressing these problems could help in identifying focus areas and provide CSR ideas.
India in a pioneering manner introduced CSR as a mandatory activity for companies through The Companies Act, 2013. The Rules under the Act also specify the areas of priority for companies to spend their CSR amount. Being a developing country, having a growing population of over 1.35 billion, India is striving to ensure economic growth and development while at the same time trying to ensure that the inequality among its population does not go out of control.
There are regional imbalances as well as rural-urban inequalities. The government does take steps to address these inequalities, however, it is not possible to tackle all these problems simultaneously and quickly. These problems in our society provide service for corporate sector to address the issues and contribute to social development while also contributing to economic growth and development.
Regional backwardness is a fact in various parts of India. One such area, which is recognized as one of the highly backward in the nation is the Kalyana Karnataka Region. Though bestowed with natural resources and rivers the utilization of these arenot effective. Some major cement and steel manufacturing companies operate in the region. However, the benefits of these industries are enjoyed by non-local population. Be it direct employment or indirect employment, it is mostly the non-locals who have gained out of opportunities. But CSR provides an opportunity for these companies to contribute back to the society from which they derive their resources to function.
A cursory glance at the Human Development Index parameters will reveal opportunities for the CSR activities needed in the region. HDI composes of three broad parameters viz., Health measured by Average Life Expectancy, Education measured by Adult Literacy Rate, and Income is measured by Per Capita Income. The Human Development Index of the national level is taken as the benchmark and though the HDI of Karnataka is above the national average, the KK Region is considered to have HDI at less than national average. This was the primary reason why the Central Government introduced Article 371(J) to provide special provisions for development of the region. The extra effort of the government to address the regional imbalance through creation of HKRDB (Hyderabad Karnataka Regional Development Board) is visible.
Human Development Indicators in Kalyana Karnataka (KK) Region
Table 1: Literacy Levels in KK Region (2011 Census)
| Region / District | Literacy Rate (%) |
|---|---|
| National Average | 74.04% |
| State Literacy Level (Karnataka) | 75.36% |
| Bellary | 67.43% |
| Bidar | 70.51% |
| Kalaburagi | 64.85% |
| Koppal | 68.09% |
| Raichur | 59.56% |
| Yadagir | 51.83% |
| KK Average | 64.45% |
Table 2: Income Level in KK Region (2016-17) – Economic Survey 2018-19
| Region / District | Per Capita Income (₹) |
|---|---|
| National Income Level | 1,03,870 |
| State Income Level (Karnataka) | 1,61,922 |
| Bellary | 1,34,150 |
| Bidar | 85,713 |
| Kalaburagi | 83,619 |
| Koppal | 82,787 |
| Raichur | 90,530 |
| Yadagir | 81,845 |
| KK Average | 95,887 |
Table 3: Life Expectancy at Birth (Years)
| Region / District | 1991 | 2001 | 2011 |
|---|---|---|---|
| National Avg Life Expectancy | 60.3 | 64.3 | 67.9 |
| State Average Life Expectancy | 62.1 | 65.8 | 68.8 |
| Bellary | 62.8 | 66.1 | NA |
| Bidar | 61.0 | 63.3 | NA |
| Kalaburagi | 59.5 | 62.9 | NA |
| Koppal | 60.0 | 63.2 | NA |
| Raichur | 60.0 | 63.9 | NA |
| Yadagir | 59.5 | 62.9 | NA |
Though the government has created social and economic infrastructure it is not sufficient and is plagued by bottlenecks and administrative delays in decision making. CSR expenditure over the years given in Table 4 indicates the potential for CSR Activities to play a role in the HDI improvement.
Table 4: CSR Expenditures in INDIA (₹ in Crore)
| Focus Area | FY 2014-15 | FY 2015-16 | FY 2016-17 | FY 2017-18 |
|---|---|---|---|---|
| Education | 2,589.42 | 4,052.15 | 4,491.74 | 4,478.88 |
| Health Care | 1,847.74 | 2,563.73 | 2,481.94 | 2,127.07 |
| Livelihood Enhancement Projects | 280.17 | 393.38 | 515.47 | 654.04 |
Opportunities for CSR & Insights from Literature
CSR can play a significant role in improving education, health and income level in some parts of the region. Social and economic infrastructure development can play a catalytic role in improvement of HDI.
Dr Subash Pawar in his article highlights that there is ample potential for the corporate sector to address the missing gaps in the education system. There are opportunities for Indianc ompanies to restructure the education system at alllevels, i.e., elementary secondary and higher education. He points out that the considerable resources and pool of experience that the corporations possess can go a long way in the effective implementation of the statutory right to education.
In his article CSR- Key Issues and Challenges in India, Parveen Maan, proposes that Corporate Social Responsibility is the duty of everyone. i.e., business corporations, governments, individuals because the income is earned only from the society and therefore it should be given back; the wealth is meant for use by self and the public; the basic motive behind all types of business is to quench the hunger of the mankind as a whole; the fundamental objective of all business is only to help people. However he has also observed that NGO’s and Government agencies usually possess a limited outlook towards the CSR initiatives of companies, often defining CSR initiatives more as donor-driven. As a result, corporate find it hard to decide whether they should participate in such activities at all in medium and long run.
In their paper titled ‘Aligning CSR activities of Health Care Sector to Developmental Needs of India’, Desai, Preeti S; Chandawarkar, Meena R. propose that corporations must use their expertise of their business to meet the developmental needs of the country. The noted ‘Since no one can understand the health care needs of the country better than Health Care organizations it becomes necessary for them to undertake such CSR activities which address the development needs of the country’, this can be generalized for many other industries.
To have practical insight a study is conducted on CSR activities of some cement companies, banks and educational institutions in geographical area of Kalyana Karnataka Region (formerly known as Hyderabad Karnataka Region) covering 3 of the 6 districts viz., Bidar, Kalaburagi and Yadagir. The objective is to study if these CSR activities are addressing problems which can reduce the HDI gap of the region in comparison to developed parts of the state. The study brought out various aspects related to CSR where organisations are contributing.
I. Role of CSR in Education
The Economic Survey of Karnataka 2015-16 proposed Sahabhagitva Scheme. This scheme has been designed to improve the infrastructure in colleges through Corporate Social Responsibility (CSR) and other funds by establishing linkages between Educational Institutions, Industries and IT/BT Companies.
Schooling
The government schools are providing basic education. There is need for upgradation of schools, providing toilets especially for girls and teaching aids in many schools. CSR funds can help in making these schools as model schools.
Communication Skills
The need for good communication skills is essential for employment in the formal service sector. Several talented youth who do not get proper language skills are not able to get opportunities which they could easily discharge if they had command over language. The corporate have engaged services of rural graduates in providing quality communication skills in villages, but the number of such graduates employed for these programs is miniscule. The results are visible wherever these have been practiced. However, the uncovered areas are much more. Tie up with IIT’s and TISS who are conducting these programs using ICT will also ensure quality of classes.
Computer Literacy
Another gap often found even among the educated persons is the lack of ability to use computers at workplace. The cost of original software is a major hurdle in providing learning opportunities. CSR and NGO’s can help the rural youth learn the computer skills.
Scholarships
The government scholarships address the financial needs of certain section of the society. There are several families with low income who are not eligible for scholarships, and the first victims of the financial problems of such families are the girl children of such families.
Sponsoring Smart Class and Modernization
Several private schools which operate in the region operate with shoestring budget find it almost impossible to invest in modern teaching aids. The students, understanding of concepts with the aid of IT enabled visual tools would be greatly enhanced. Companies can identify schools which would utilize such resources properly and sponsor standardized kits.
Graduates Finishing Schools
The industry is better equipped to assess the knowledge and skill requirement of fresh graduates for employment than schools. They can plan the programs to bridge the gap between what industry needs and what the students’ possess.
Skill Development Initiatives & Job Oriented Training Institutes
A step ahead than graduates’ finishing schools, the industry can interact with educational institutions to develop industry relevant skills among students during their college days. A well planned approach by coordinating efforts of various companies will help arrange needed man power, financial and physical resources.
II. Role of CSR in Health
CSR amount is being spent on health care and improvement of health care facilities. Some areas are covered by present activities and in some areas more can be done.
Creation and Maintenance of Healthcare Infrastructure
Hospitals or clinics and Pathological Labs run by the corporate are benefiting many rural persons in the area. Similarly the assistance given to Primary Health Centers, ambulances provided, donation of equipments has improved the quality of medical services offered.
Role during COVID Pandemic
Awareness programs, distribution of masks, sanitizers, providing food, water and medicines for migrant labourers, truck drivers, organizing Covid Tests, contributing to state Government Covid fund, PM Cares Fund, are some activities undertaken in the CSR account. Opportunity to support online education, sanitization of public places using heavy machineries, allowing use of guest houses for isolation or as Covid Care Centres, supplying subsidized canteen food to hospitals and Covid Care Centres, encourage volunteerism of employees to volunteer in relief work, organizing blood donation camp, procuring medicines, digital thermometers, pulse oxymeters for clinics, schools etc. are open for all corporates.
Oxygen Supply and Ventilators
One cement company, Shree Cements in Kalaburagi and one steel company JSW Steel in Ballari have diverted their Oxygen production for medical use, saving hundreds of lives during the second wave. Many corporates have donated ventilators, funded Red Cross activities, provided oxygen cylinders from mid 2020 onwards.
Medical Logistics
Opportunity to utilize the trucks at their disposal for providing logistic support to Government to move oxygen and medicines, oxygen plants, ventilators, etc. is also open for cement and steel companies.
Women’s Health
The stress on rural sanitation, construction of toilets has not only made rural places more clean and hygienic, the health of the women folk can be benefitted a lot. Education on basic hygiene healthy food habits, screening camps for various preventive diseases have also contributed to improved health and life expectancy among women.
Children and Youth Health, Recreation and Sports
CSR to support recreation, sport and physical activity at village level is visible. Low cost kits and sports equipments are being provided to villages and rural schools, which have helped them to spend their spare time usefully and constructively. Banks in the region and a couple of cement companies have helped in providing volley ball , throw ball kits, carrom board, chess sets, cricket set, football and exercise equipments. Sponsoring talented sportspersons has also started in the region.
While this is welcome, it would be more useful if the companies could pool their resources and provide basic infrastructure. A level play ground with marked boundaries for various games and standard sized courts would certainly lift the standards of the rural sports oriented children. There are instances where same materials are given by different organizations to same village.
Screening for Preventive Diseases & Early Detection Camps
Basic health check-up camps, heart, BP, Sugar Test among other tests are being organized occasionally. The frequency and reach must increase. If the companies can pool their resources, they can provide mobile clinics along with basic pathological services round the year covering large population instead of just working in the vicinity where such camps are frequent.
Ambulance Services
Some companies have their ambulance services which they allow general public to utilize. But the vast size of the HK region and sparse density of hospitals in semi urban and rural areas necessitates greater numbers of ambulances. If joint contributions can be made a good fleet of ambulances can be strategically located to get treatment to the patients in the golden hour/s period in greater geographical area.
Food and Accommodation for Attendants of Admitted Patients
Kalaburagi, for instance, has several Dharamshalas (free or highly subsidized food and accommodation centre) which are no longer properly maintained and scarcely used. Constructed by various communities, most of these are very old and were meant to cater to travelers belonging to their own communities. If corporate can rope in along with local businessmen, financial burden of accompanying relatives/family members of hospitalized patients can be reduced.
Counseling and De-addiction Centers
Many social evils can be reduced and both the addicts as well as the family members may need counseling and many drug addicts may need de-addiction or rehabilitation programs. This is once again which only one organization can take up, hence a collective effort where the companies join hand with leading psychiatric institutions such as NIMHANS etc. can run such centers round the year.
III. Role of CSR in Increasing Income
CSR spending is visible in road construction, technological support to farm & industries, environmental protection, sustainable development and water conservation. These activities have both direct and indirect impact on economic indicators.
Marketing Support for Agriculture
Corporate aided cooperative stores could act as direct purchaser from agriculture producers and act as liaison agents to sell farm produce across their plants. Joint CSR activities can setup storage facilities, both dry and cold storage, cold transport, which can potentially increase farmers’ income and also stabilize prices during non-season periods.
Assisting Technology Induction in Farming
Horticulture, floriculture experts employed by corporates can advise farmers; engineers can suggest utility of company’s technology in agriculture. Digging wells & ponds scientifically, controlling soil erosion etc. are areas where corporate can benefit agriculturists.
Support Sustainable Development by Assisting Farmers
While companies get credit for environmental protection and helping reduce carbon emission, farmers can get better income through CSR sponsored horticulture and commercial plantation.
Training for Ancillary Units
Technology used in ancillary units cannot be regularly updated. Managers of large companies are usually better exposed and informed about technological developments & improvements which must be shared by arranging training for ancillary units.
R & D for Ancillary Units
Ancillary units can be helped in R&D activities by major companies, especially those ancillary units which are their suppliers. This would create a win-win situation.
Assistance in IPR Matters to Ancillary Units and Innovators
Obtaining Patent & protection of IPR, avoiding violation of IPR’s are not easy for small firms and innovators. Corporates can guide them in these matters.
Financial Assistance and Livelihood Mentoring
Financial guidance for self employment, artisans, self help groups (SHG) by carefully crafted CSR activities, involving proper training and mentoring can improve rural economy. With participation of professionals from industry, banking and academia in such activities, viable models can be created and benchmarked elsewhere.
Conclusion & Key Recommendations
CSR Budget when compared to Government Budget is miniscule. But it is the desire to put its Human Resources and Physical Resources to socially gainful activities, apart from financial resources, that can make CSR really meaningful. Contributing to improving HDI is just one dimension of their responsibility.
On the basis of the study it is suggested that:
- Companies can come together and plan efforts which would avoid duplication of efforts as well as create possibilities of creating synergistic effect in CSR Activities.
- CSR activities must be targeted to most needy and not just to areas which are logistically convenient.
- Big or Major CSR projects requiring round the year and major investment can be taken up jointly in association with government.
The very philosophy of CSR should be CSR for social transformation and not merely CSR for legal compliance. The companies are increasingly recognizing that they owe their existence to the society and hence it is imperative for the companies to sustain the society through their activities, directly or indirectly, and with greater purpose while implementing their CSR Activities.