Corporate social role: Need to focus on community needs

There is much heated debate on whether corporates should spend 2 per cent of three years’ average of their profits on corporate social responsibility (CSR) activities. This comes at a time when on the one hand the government is finding it hard to validate its expenditure on development.

While on the other it is cornered about giving away natural resources at throw away prices. There is a growing feeling that CSR activities are a necessary requirement if India has to develop. This is not only because corporates earn a lot of money from the community and therefore they should give back, but also because some believe they would bring in some of the good points of their work style.

Innovation in industry has catalysed the economy, and such kind of innovators are feted by all. However there hasn’t been much innovation when it comes to CSR. Much of CSR activities in India are focussed on education, primary healthcare, maintenance of community parks, on the companies core competence and philanthropy. Though there are notable exceptions, where corporates have worked on water management, skill development etc but these are few and far between.

 However, in this discussion of CSR which is hogging the limelight, the 2 per cent suggestion is limited to only those companies with a turnover of Rs 1,000 crore or more or a networth of Rs 500 crore or more,  net profit of Rs 5 crore and above in a fiscal year.

The role that  the Micro, Small and Medium Enterprises (MSME) can play in CSR activities is completely ignored. This is an unfortunate oversight caused by the traditional and limited idea of what CSR entails and the amount of money that needs to be spent. Not all CSR need be big spend, the value of CSR need not be  proportional to the money spent but on the audience,  the kind of intervention and the rationale behind it.

CSR is no longer seen as a form of nation building but as a way to solve community-industry infraction. MSMEs are in a unique position to add over and above what they do to the country’s GDP.

This is because they are distributed all over India, employ a large number of people in small groups and are located in both urban and rural areas.  According to the 2011-12 annual report of the ministry, there are 15.64 lakh registered MSMEs in India. Of this 94.94 per cent are micro enterprises, 4.89 per cent are small; about 45 per cent of them are in rural India. In India they employ about 732 Lakh people according to the ministry.

Cluster and hubs

Though there are cluster and hubs for MSMEs many of them are located within communities and therefore indirectly foster the economy of the community. This is their strength which needs to be tapped.

Their location within the community is an unrecognised advantage that has potential for CSR activities which do not require huge amounts of money.  Being located within the community, workers and the owners of these MSMEs have direct knowledge of the needs and problems of the community.

One of the first things that comes to mind is facilitating community integration – this can be done by MSMEs  taking the initiative to organise events on special occasions. Others way could include coordinating with other institutions to hold medical camps. Sharing information with the community on jobs available within the sector.

There is also an opportunity to provide internships to youth during summer holidays. This would not only give them hands on experience and stoke their entrepreneurial desire but could also be an opportunity for them to earn some money.

As many of those employed in MSMEs are skilled but not highly educated and have families that may be illiterate  the MSME factory can become an education space. Topics ranging from health and hygiene, importance of education, to nutrition and sanitation can be touched upon through posters and through organising meetings with experts.

These spaces are also an opportunity to inform the workers of various government schemes aimed at improving the living standard of people. Besides informing workers of such schemes the factory space can also keep forms for such schemes and also help the worker fill them.

The role of the government is essential in such an effort.  It begins with providing incentives to MSMEs especially for creating internships and  can extend to linking hospitals. More importantly the government must find a way to share information subjects  of health etc so that the there is a trickle down effect. 

The MSME plays a vital role in the Indian economy, it also has a huge impact on Indian society as it gives opportunities to the skilled who may not have much education. There is need to recognise the potential of the sector beyond this. Because of its genetic makeup it has the potential to add much more value to the community. It is up to the government to rise up to the occasion.

(The writer is an expert on environmental and socio-economic issues)