Consumer welfare missing link in CSR

Consumer welfare missing link in CSR

Much water has flown ever since Corporate Social Responsibility (CSR) was given a legal status with the notification of Section 135 under the Companies Act, 2013. Further, the Government of India issued the Companies (CSR) Policy Rules in 2014. Since then, crores of rupees have been spent by the companies towards discharging their social responsibilities.

To a question (No 656) in the Lok Sabha, the government has replied that the CSR expenditure during 2014-15 was Rs 6,337 crores. The bulk of the expenditure (Rs 1,462 crores) is on education/vocational skills and livelihood enhancement followed by eradicating hunger, poverty and healthcare for which the corporate sector has spent Rs 1,421 crores.

The same trend could be seen during 2016-17 when education and healthcare accounted for Rs 4,045 crores which is over 46% of the total CSR expenditure. The other areas which received the support of the corporate sector include women, elderly, children, arts and culture, rural development etc.

While this is commendable, it appears that the corporate sector is averse to legal empowerment, particularly those relating to consumer protection, civic activism etc. Consumer protection projects do not find a mention in the list. Even in case of environment, where the corporate has spent a substantial amount, it may not include projects to promote legal rights related to environment protection. The absence of consumer protection in the CSR scheme needs attention.

The success of consumer protection hinges on three pillars i.e. the government, the business and the consumers. The government, on its part, has made laws and a number of policy measures have been put in place. It has set up the Consumer Welfare Fund to provide grants to Voluntary Consumer Organisations (VCOs) to support consumer protection and welfare activities. Independent regulatory authorities have been established which are mandated to balance consumer and business interest.

The business, on its part, has the responsibility to adhere to the laws of the land, respect the rights of its consumers, follow ethical values and discharge its duties towards its pay masters.

At the basic level, the role of consumers includes knowledge of their rights and enough skills to use the grievance redressal mechanism in. They have a right to products and services equal to the value of the money they pay. As responsible consumers, they have a duty to buy genuine products, follow the instructions, not to encourage black market, inform manufacturers of fake products etc.

Ideally, the interests of the state, consumers and the business should not conflict with each other. If that be so, there is nothing to stop the business from promoting consumer welfare. We do have some best practices like the Council for Fair Business Practices and the Advertisement Standards Council of India.

Besides there are other trade bodies and associations like the Automobile Manufacturers Association, Chambers of Commerce, and Indian Direct Selling Association which have evolved self-regulatory measures. The Federation of Indian Chamber of Commerce and Industry (FICCI) has launched a campaign against fake products. But, the impact of these measures is limited. The less said the better about the banking industry’s code to protect consumers.

The reluctance of the corporate sector to promote consumer protection is due to the perceived conflict of interest between them and their consumers. Most of the business practices go against the interests of consumers. Be it exaggerated or misleading advertisements, one-sided contracts, poor quality products, deficiency in delivery of services — these are all violation of consumer rights. How can a business guilty of these malpractices support consumers in knowing their rights?

On the other hand, it is observed in some cases that consumers have misused their rights. Complaints are filed in the forum seeking brand new vehicles for a simple defect which can be rectified by replacing a part. Medical practitioners have been hauled up for no reason.

It is time the corporate sector and consumer groups collaborate with each other to build their mutual trust and confidence by using the CSR funds. The CSR policy/rules under ’Education’ includes ‘spreading legal awareness amongst people and disadvantageous sections of the society about their rights & remedies available’ as one of the projects.

The corporate sector may help VCOs spread basic legal awareness among rural consumers about food adulteration, fake products, weights and measures, misleading advertisements etc.’ The corporate sector can make use of this clause.   

(The writer is member, Central Consumer Protection Council)