Inside India: Experts discuss CSR

Corporate social responsibility has become very fashionable for the government and for the corporate sectors. But eight years ago it certainly wasn't.

In a discussion with CNBC-TV18's Shereen Bhan, Arun Maira, member, Planning Commission, Veerappa Moily, Corporate Affairs Minister, Dilip Chenoy, MD and CEO, NSDC and Neelam Chibber, co-founder, Mother Earth, speak about corporate social responsibility. Below is the edited transcript of the interview on CNBC-TV18. Also watch the accompanying videos. Q: As far as the government is concerned, one of the problems is the approach to addressing these problems. If you don’t identity the right problem, you will never come up with the right solution. The approach of the government seems to be to throw money at everything. Would you agree that the approach is the problem to start with? Maira. I am so pleased that I am with the Moily because he and I had been talking about changing the approach of corporations. But you are asking me to change the approach of the government. It’s actually an approach of collaboration between the people, the corporations and government. Here we are making the 12th Plan and we know that in this 12th Plan, the condition of our children, their education, their health must be our primary concern. We are doing very badly as a country with respect to those matters. So, people say, ‘well, we need to throw more money towards education and health and unless you put 2% of your GDP towards health, you will not be able to improve the health and a larger number towards education.’ So, it’s about money it seems as you said. But right now with the GDP not going as well as we thought it might, there is not that much money to give to these sectors. So, what’s the way out? One is to postpone it till we get the money, but the children are growing. Their blood is forming, their brains are forming. They need the education and the health now. So, what do we do? We got to find innovations. Innovation means with less money I will provide a better quality education and health than the conventional models. It would have to necessarily require collaboration because innovations invariably mean that you got to work outside your competency and your box. So, it’s only when you are challenged and combined with other diverse competencies, that innovations are more possible. So that’s the approach. We need more collaborations and certainly innovations a different approach. Q: Perhaps the reaction from industry would have been different, had the government not made it about money. Had the government not said that you have to put 2% of your profits away mandatorily towards corporate social responsibility, some of them don’t have the bandwidth to put up hospitals and schools etc. Some of them don’t know how to do that. The whole point of making this effective was not how much they would put a way by way of mandatory profits given to the government, but how was this money actually going to be used, how was this money going to be allocated, what was this money going to do. That discussion never really took place. Moily: That is the actual model which we intend to go in. That’s why the schedule has been put up. That schedule has a lot of flexibility. As and when the model is livid, we can replace with the other one. Q: For instance, if the government were to say we are identifying 10 mega projects. This is where this money that you put away is going to be used for, perhaps the reaction would not have been as adverse. Moily: No. It is not as if government is taking over these funds. It is left with the companies to administer. Ultimately, if they cannot perform according to formula which you have said, they will have to explain it why they could not perform. It’s a voluntary effort. Q: What has your experience been at this point in time at the National Skills Development Corporation (NSDC) because you are trying to get that collaboration going? Chenoy: I think if you take the NSDC experience of getting the corporate sector involved in delivering scalable, sustainable, skilled development models. I want to make a distinction. It’s not skill developed through aid or corporate social reasonability. That means this is not grant based or free based, these are sustainable model. I think the response so far has been great. We have got 49 corporates wanting to get into this business. What is fascinating is that if you look at each one of those 49 skill development initiatives that the board has approved, there is not a similar one. Each model is different, each model is unique. Q: How do you actually talk about social entrepreneurship in today’s context? How do you get social entrepreneurs to scale up? Chibber: Social enterprises need to scale. I totally believe they need to scale. They need to scale in the collaborative approach. Like we have an investment from Future Group, so that’s it. If I believe that all the 10-20 large business houses in the country, each incubated three to four, five-six social enterprises, you would solve huge amount of problems because we are in the livelihood space, so we needed retail market knowledge. We had to scale retail business. So, we approached Future Group. Q: Also, let’s be very clear about how we define a social enterprise. This is a sustainable often for profit organisation. Chibber: Yes. It is for profit and a lot of social investors beat me on the head with it, but I do believe social enterprises plough back all their profits and dividends back into growing the business. That is the aim of a social enterprise that it scales because there is so much to be done. So, maximum amount of your profits should go into scaling your impact. _PAGEBREAK_ Q: Is there any role for the government, as far as social entrepreneurship is concerned? Chibber: Huge, massive. I firmly believe one of the first and foremost endeavours the government has done with NSDC is fantastic. So, this is I think one of the first endeavours where they have put money into a fund. NSDC is an investment fund. The government needs to do that for all the sectors. They are doing it for skill, they should do it for health, education and everything. Q: Is that an idea that you are toying with at the Planning Commission? Maira: We formed a National Innovation Fund and this National Innovation Fund is going to direct investments towards different challenges. It’s not just skills as she said. There is health, education, water, minor urban services, which are needed for the less endowed people in the cities and so on. So, we have challenges. We know that social entrepreneurs and business entrepreneurs don’t, at that stage, get support because the bigger investors, even though they call themselves the Indian investors are waiting for a very big real angel before they put money in. So, to direct support to these ventures through money and some mentorship, that’s what the fund is set up for. Q: As someone who is partnering with the government in the NSDCs programs, what drove you to that and what is the need for you and how are you going about scaling up your contribution to it? Vijay Thadani, CEO NIIT: What is unique about NSDC initiative is, if I was to use a much clichéd statement, instead of giving a guy a fish, teach him how to fish, I think NSDC is giving you the fishing rod so that somebody can teach you how to fish, so that you don’t have to depend on a fish. What attracted us to partner with NSDC was not only just availability of funds which perhaps is not as important, but its important, what is also important is the sector skills councils which NSDC will be spawning because there is a great need for standardization. We are talking of skilling 500 million people, how will we know that an individual has a requisite skill? Even within the country we have 6 or 7 standardization initiatives going on. So, how do we make sure that if I say I am a plumber grade A then somebody else will accept me as plumber grade A. So, NSDC is also making sure that these are sector specific initiatives. _PAGEBREAK_ Third very important issue is the industries involvement because industry associations are important stake holders in NSDC. Typically, while on one hand sitting from the industry its easier to complain that we don’t have skilled people, when it comes to giving their time and effort and not necessarily the money, industry is rather shy. In IT sector, it has got proven again and again that if industry came forward then together with very limited funding you can create a new industry sector. So, NSDC will enable that to happen in multiple sectors, these are some of the initiatives. Q: You are looking after the Dr Reddy’s foundation and you are looking at the issue of creating sustainable livelihood, not partnering with the NSDC, doing it as a corporate foundation led initiative, what has been the challenge of scaling up as far as you are concerned? They have government support, they are doing it as a collaborative effort, what has been the challenge as far as you are concerned of scaling up? Jitendra Kalra, CEO, Dr Reddy Foundation: Scaling up gets limited by equity, the amount of equity that we can draw. But then we are concerned about the colour of money which comes in. So, we are going slow, we are saying that, the money which comes in should essentially look for social dividends and not dividends in the traditional sense, that’s one limitation. Today’s rules and regulations are not creating conducive environment and that’s again where the government comes in and can play a huge role. The kind of equity for example we are looking for, which chases only social returns, it is not recognized in legal terms. It  doesn’t get the kind of benefits which some of the other structures get like tax benefits. Q: If you are a social business why would you be looking for tax concessions? Kalra: No, its not about tax concessions. Today legal structures either they provide for profit or they provide for a trust. There is no way in between, which is like a business yet not a profit entity. That’s where we are struggling largely and looking forward towards partnership with the government. Q: Are you thinking about creating something in between? Veerappa Moily, Corporate Affairs Minister: I got that point, he is right. He has come out with a new innovative solution for the problem. When it is a social enterprise, you must expect only social dividend. Then in any corporate body, a body like this they work on that, the government should facilitate that. It has to be treated as a social dividend. On those parameters it has to be looked into. Q: It will have to be your ministry that will move Moily: Yes, I got his idea, we will work on that. It’s a good suggestion. Q: We have featured your report in our series. The emphasis at this point in time is really been on infrastructure, the emphasis is not on learning. Do you see that as changing now? Yamini Aiyar, Senior Fellow, Centre for Policy Research: No. We all accept that quality is a problem and that the education system is in a crisis because children go to school and don’t learn. But I don’t see that we are doing very much about monitoring that quality, evaluating what happens once children go into schools and creating systems where we can enable a focus on quality. The entire Sarva Sikhsha Abhiyaan, which is now the mechanism for the implementation of right to education (RTE) is so deeply centralized and it is structured in such a way that all it can really provide for is macro input into schools. So, a centralized system does not enable the actual needs of an individual child in an individual school to be reflected in the way in which the planning and budgeting is done and the way in which a program is implemented. So, we need a serious re-think of how we structure our planning and budgeting systems in order that schools become the focus, children become the focus, the individual learning levels of children in those schools become the focus and on that basis, should we be allocating more money to the system. Parvin Sinclair, Director NCERT: I strongly disagree with the statement that there is no hope and no improvement. It may not match the money. You yourself have said money is not the point, but look at the kind of initiatives, right from 2005 the national curriculum framework based on constructivism and how children learn, for once it looked at the child as an equal and coming with a background, each child’s background is fitted into a setup with enough space for each child. This requires the teachers to be able to scaffold properly and accordingly. That requires training. The whole thing requires a complete sea change of looking at children. Otherwise people largely think children are blank slates. Q: So, you are hopeful because you believe that approach is changing? Sinclair: Hopeful because it is changing, not that I believe, but it is and I see that. There are improvements, they are small but they are there.