Mandatory CSR in India has made a significant contribution in addressing various social issues. It has been making an effort to tie loose ends by working in every sector, including health, skilling, education, women empowerment, malnutrition, and so on. However, the general pattern that has been observed suggests that the majority of CSR projects have focused on the direct delivery of services to beneficiaries.
The main intent of the CSR mandate was to encourage India Inc. to actively participate in national and social development. In order to meet this expectation, corporate organizations will need to make certain structural shifts in their CSR projects. That is, the businesses will need to address capacity building, enable the market and address communities instead of individuals to build a sustainable community that will be able to take care of all of its needs eventually without depending on the firm.
There are two ways in which companies can be instrumental in providing this – through causative spending of CSR funds and effective partnerships.
Causative Spending of CSR Funds
Application of finance instruments, such as loan guarantee funds (LGFs) could help to achieve sustainable impact and generate greater social returns for CSR. An LGF is a non-bank financial instrument aimed at helping micro, small, and medium-sized enterprises access formal lending through the provision of credit guarantees that mitigate the risk of non-repayment.
For example, there are 1,000 young adults who have dropped out of school. They are unemployable and in need to make money. Normally, a CSR project would enable imparting vocational training to them. But it will not address the inelastic nature of the formal job market in India, where there are more job seekers than jobs. Instead of adding 1,000 more job seekers in the market, a catalytic intervention would create 1,000 job creators through the use of LGFs.
Effective Partnerships for CSR Projects
Another way in which the companies can be instrumental in socio-economic development is by encouraging new forms of partnerships. Non-profits have traditionally been Indian companies’ partners of choice for executing CSR programs. However, partnerships between companies with other different types of competencies tend to benefit all.
India has the third-largest business-incubator ecosystem in the world. It abounds with technology and innovations, which can help accelerate socio-economic development. At the same time, it has seen persistent gaps in financial and non-financial capital available to social enterprises. Partnerships between companies and start-up social enterprises can open up a plethora of opportunities.
India has the fastest-growing economy in the world. And yet, India ranks 116th out of 157 countries on the 2017 Sustainable Development Goal Index. India Inc. by themselves might not able to make ground-breaking changes. But the companies can lay down the groundwork in such a manner that the other stakeholders are encouraged and enabled to create impact.
