Corporate Social Responsibility and Northeast

CSR funds worth Rs 1 trillion were accumulated in 2020-21.Of this, the eight NE states received less than one per cent

For those in India’s Northeast, the idea of corporate social responsibility (CSR) began dawning in a hard and painful way in the 1990s, long before it became law in 2013, making it mandatory for companies of a certain level of profitability to register and contribute towards a consolidated CSR fund.

Assam’s rebel group, United Liberation Front of Asom (ULFA), was at its peak then, inspiring a sense of what Irish poet WB Yeats called “a terrible beauty” among a large section of the Assamese population already besieged by a feeling of demographic and economic marginalisation in its homeland. In the popular Assamese imagination of the time, ULFA were romantic warriors playing Robin Hood – robbing the rich to help the dispossessed. Those were heady days, marked by a peculiar public psychology of a cocktail of aversion to the violent social turmoil but laced nonetheless with a dose of romance.

One of the things ULFA began doing was to target industries, especially extractive ones, based in Assam, accusing them of a colonial agenda of draining the state of its resources for their profit. Those in tea, timber and oil became the prime targets of ransom kidnapping and assassination; many were told to shut shop and leave.

As water finds the path of least resistance, this immutable law of nature was also what these companies sought. To buy their peace, they began investing in the communities they worked, building schools and health infrastructure, extending employment opportunities, etc. What came into cognisance was that this investment was not only morally right but also a prudent business strategy. In the long run, for any business to run smoothly, the societies in which they functioned had to be made stakeholders.

Much water has flowed down the Brahmaputra and other Northeast rivers. Like many other rebel groups in the region, ULFA is still very much around, but the sheen of romance that once knighted them in the popular imagination has faded, relegating them to a corner of public consciousness. But one of the better legacies they may have left behind, at least in Assam, is a warmer culture of a symbiotic relationship between corporations and the communities where they build their business foundations. It would also not be too far-fetched to speculate that the clause introduced in India’s Companies Act in 2013, which made a corporate contribution to the CSR fund compulsory, had the Assam experience as a determinant, at least subconsciously.

Section 135 of the Companies Act, 2013 requires every company, private limited or public limited, which has a net worth of Rs. 500 crore or more, or a turnover of Rs. 1,000 crore or more, or a net profit of Rs. 5 crore or more during any financial year, to spend a minimum of two per cent of the average net profits they have made during the three immediately preceding financial years towards the upliftment of society.

According to a brochure released by the Federation of Indian Chamber of Commerce and Industries (FICCI) at a recent workshop in New Delhi, the accumulated funds under the CSR in 2020-21 is a whopping Rs 1 trillion or Rs. 1 lakh crore. The brochure also notes that the eight northeastern states (Sikkim included) received only Rs. 196.39 crore of this amount, which is much less than one per cent. According to the Government of India CSR website, of this amount, a state like Manipur received only Rs. 10.3 crore from 42 different companies during the financial year.

This is unfortunate by most parameters. Northeast certainly deserves more. Its forest and mineral resources are rich, and many companies have capitalised on this. In other sectors, too, the Northeast is a prime market for many. Take the case of Indigo Airlines. When the company decided to enter the aviation market as a low-cost passenger carrier in 2006 with just one aircraft, the route it chose was Delhi to Imphal via Guwahati. Today Indigo operates 1600 flights daily to 101 destinations and still does substantial business in the Northeast, so there is no reason why a respectable share of its CSR contribution should not come to the Northeast. The same can be said of many others dealing in products ranging from baby foods to automobiles.

From the point of view of the government’s developmental responsibility, data again suggest Northeast is not getting its fair share. Its rural population is 84 per cent, far higher than the national average of 70 per cent. People living below the poverty line in this region are 34.28 per cent, again far above the national average of 26.1 per cent. And yet, these states are virtually side-lined when allocating CSR funds meant precisely for social upliftment.

It must be added here that the scale for measuring poverty may be a little tricky here. As in most traditional agrarian societies, many of whom are tribals depending on forest recourses for sustenance, the case is also generally of people with stomachs full but wallets empty. This also indicates that climate change can drastically alter their livelihoods, so investment in fighting climate change can be directly relevant to them.

Despite these caveats, the figures are so starkly weighed against the region that even FICCI thought it fit to have a special session on the Northeast during its Delhi conference to look for a more just and equitable way forward. The question is, why exactly is Northeast in the blind spot of CSR investment? Is this yet another indication that India intuitively does not look east, and its obsession remains to the west of its border? This, despite its much-vaunted Look East Policy, now rechristened Act East Policy? As the late Ashok Mitra noted in a column, in 1937, when Burma (now Myanmar) was separated from India as per a provision in the Government of India Act 1935, there was not a squeak of protest in India. But when Pakistan was separated from India ten years later, unprecedented carnages left unimaginable tragedies on both sides of the border. Is it not time yet to make amends and readjust this national vision?

Article Credits: New Indian Express