In an interview with OneWorld South Asia, Dr L C Sharma, Director of Integrated Rural Development (IIRD), said that corporates should be convinced to invest in rural India.
OneWorld South Asia: How do you look at the transition from corporate philanthropy to the Corporate Social Responsibility (CSR) as mandated by the new companies Act?
L C Sharma: Yes, of course. I see it as a significant transition because earlier it was according to the will and wish of the corporate house weather to invest for social cause or not. But now, it has been mandated by the law that the corporate entities are bound to spend a specific amount for the development of the society.
This transition is going to bring a tangible change in the society while contributing to the meaningful development on the social front.
OWSA: What kind of immediate impact do you see of the new Companies Act on the nonprofits?
Sharma: The immediate impact is that NGOs are now becoming more vibrant. Earlier, the NGOs were facing several difficulties in sustaining themselves. This Act has created a ray of hope in the NGOs as they are now looking forward to more financial stability by the way of new partnerships with the corporates for implementing the developmental work in the larger interests of the society.
OWSA: What kind of employment opportunities do you foresee with the investment of around Rs 12,000-15,000 crore every year?
Sharma: I foresee employment generation in three ways. Firstly, large number of people would be required to implement the upcoming CSR projects. Secondly, on the regulatory front too, the government might think about enriching the mechanism to ensure the enactment of this Act.
Also, if special emphasis is given to skill generation while implementing CSR projects it could also lead to employment generation apart from providing trained manpower to the industry.
OWSA: More and more corporate entities are coming up their own foundations instead of donating funds to the NGOs already working in the field. How do you look at this development?
Sharma: There is no dearth of funds in the country. We have been investing a big amount through different developmental schemes in both urban as well as rural areas. In comparison to this amount, the CSR kitty is very little.
So, what matters is how the projects are implemented, be it through the government schemes or through the CSR activities. One advantage of the CSR kitty would be that the process of getting approvals and getting things done would be more efficient compared to that of the government system.
It is the prerogative of the companies to start their own foundations but it will not have any impact on the working of NGOs.
OWSA: There are big expectations from the huge amount of money which would be spent through CSR. Do you think the euphoria is justified?
Sharma: Despite Rs 20,000 crore being a huge amount, it cannot be compared to the amount of money being invested by the government on social services. But, I feel there will be more freedom in implementing the CSR projects compared to the government schemes. Within the government there is so much procedural delay which hopefully will not be there in these schemes.
Overregulation of those schemes have made them too cumbersome compared to those which are executed by the private sector. The flexibility of conceptualising and implementing the welfare projects will make the changes more visible.
OWSA: How big a challenge is capacity building for the NGOs and the corporate sector to implement the CSR projects in the wake of the new Act?
Sharma: Capacity building is a big challenge because NGOs would need to think about getting a bit more professional. In the changed scenarios, the nonprofits will serve as technical partners to the corporates for implementing the CSR projects.
The NGOs need to build their capacities in such a way that they justify their likely roles as their partnerships takes shape with the corporates. Capacity building would also be required in the areas of specific skills such as project implementation, documentation, record keeping, project writing, presentation and communication which are crucial for the operational purposes.
The nonprofits also need to enhance their organizational competencies to improve their credibility.
OWSA: What are the key challenges for the NGOs brought by the new Companies Act?
Sharma: There should be proper guidelines and rules for all the stakeholders including the civil society and the nonprofits. If there are any flaws, then there are chances that some stakeholders could take undue advantage.
There is a need to focus on sustainable development through an integrated and holistic approach. There is also a need to plan some long term projects which could bring tangible change with the passage of time.
OWSA: Do you see a competition between the government-run social welfare schemes and CSR projects?
Sharma: I wish there should be some competition. As of now there is no such competition. Why should government put their funds where corporates are investing? Both should work in different areas, so that the performance of both could be seen by the people. There should be healthy competition between government schemes and CSR activities which could go a long way in strengthening the public delivery system in our country.
CSR activities should move beyond tokenism. A special dialogue is required with the corporates to help them in channelizing the funds for rural development.