CSR Mandate: An Investment in Rural Markets

By Divyat Rungta

Edited by Namrata Caleb, Senior Editor. The Indian Economist

India is the only country with a mandated CSR policy. The Indian Institute of Corporate Affairs, an outfit set up by the Union Ministry of Corporate Affairs, estimates the move to make available over Rs. 20 trillion of CSR funds for social spending annually. The norms will apply to companies with at least Rs 5 crores net profits or Rs 1,000 crores turn over or Rs 500 crores net worth. These companies will have to spend 2 per cent of their three-year average annual net profit on CSR activities in each financial year, starting from FY15.

It is about time companies see the CSR policy as a matter of pride, and more importantly, an opportunity to develop their rural markets. Money which would have circulated amongst the middle and higher class people will now be diverted to the development of lower strata income people. There are nearly 650,000 village and 750 million people living in rural India, which is nearly twice the population of Western Europe. Thus, the challenge, rather opportunity, is a lot simpler than building a market. It’s simply about developing an existing one. The CSR policy will also lead to whole new set of jobs. In simple economics, India can increase its supply side and demand side simultaneously which will invariably lead to higher growth in the long run.

15^th August 2014 was a pleasant change from the single tone monologue this nation had been hearing on this cherished day. Narendra Modi fervently spelled out his vision on the social aspects of change required rather than the economic status, and rightly wanted private companies to play an active role. Companies must take cue and start to work on ground realities than simply transfer money to an organization. There are certain sectors where companies can target their CSR which can lead to a triple bottom line impact.

Healthcare: Unfortunately unfavorable conditions for children in rural areas, particularly girls, begin even before birth. Companies can look to assist rural women with medical healthcare right from pregnancy. Not only will it lead to better health for the mother and child, but will also reduce chances of feticides due to pre natal care. Health centers with heath workers for a cluster of villages will also go a long way to bridge the necessary gap between the poor and adequate healthcare. Access to clean water, the most basic amenity, is still a luxury for many rural areas. There is immense scope to work on fixing the poor water supply mechanism in remote areas.

Sanitation: After the 15^th August speech, TCS was quick to allocate 100 crores to toilet construction.  However, simply allocating it will invariably lead these funds into murky hands of political class. Instead, companies can reconcile efforts with the Nirmal Bharat Abhiyan which has the objective of sustainable sanitation facilities through awareness creation and health education. There are two challenges which will have to be closely taken into consideration.  First, using toilets is still an unorthodox convention in many parts of rural India as open defecation is seen as ‘natural’ and having the bahu share the same toilet as that of the father-in-law is not accepted. CSR activities will have the challenging role of influencing the population to use proper toilet systems. Second, having toilets with poor and unfinished drainage will only severe the storm than calm it. Investment in green toilets with negligible use of water and ability to produce manure is a must.

Solar lighting: CSRs can look to provide solar street lighting and lamps in rural settings. Apart from solving the dire education standards by providing light to children, lighting of homes will offer an income generation opportunity to home grown businesses. Also, although a slightly far-fetched belief, the chances of domestic violence and rapes will steadily decline with proper lighting in the entire neighborhood, and will serve as a means of empowering the women community

Education: The key challenge remains to provide skill based expertise to students. With text-book knowledge, a 10^th pass student from a government school can more often than not look only for daily wage jobs at low prices. Companies can look to provide certified training in vocational skills such as carpentry, plumbing or welding. Company CSRs can also look to provide better quality equipments in government schools, along with lucrative and accessible opportunities for scholarships.

These are just a few ways to create a ripple effect in the rural areas. Better access to basic amenities will lead to lower expenditure on health and better education opportunities. This in turn will lead to the socio-economic development of the area and better purchasing powers. ‘Rurbanising’ India with synergized efforts from companies, government and local NGOs is only going to expand the market for various industries. Companies must refrain from perceiving the CSR mandate as ‘mandatory’ but look at it as an ‘investment’ in a market. Also, with innumerable rivals coming up in the print and digital media space, positive publicity should be taken as a win-win situation. Maybe it’s time the biz world stops waiting for ‘achhe din’ and instead act towards it.

Divyat Rungta is currently a second year student pursuing B.A Economic (Hons) in Shri Ram College of Commerce. He is a die-hard sports lover and enjoys listening to Indie music. He has been deeply influenced by his parents, teachers, and the Indian Army! As a member of Enactus SRCC, he spends a lot of time working on social entrepreneurship projects undertaken by the team. Having the opportunity to interact with various communities and give them a sustainable livelihood has made a huge impact in his personal life. He strongly believes the student community has the responsibility of shaping a new India, and wants to make a significant contribution to it.