Thursday, 21 March 2013
FE@CAMPUS MASTERMIND: Runner-up entry by Mohit Marakna to question for Feb 25-March03
Question: Recently, the Companies Bill was passed with mandate on CSR spending. Is mandatory CSR good?
Response:
The Companies Bill, 2011 mandates that companies will have to s pend two percent of their net profits in previous three preceding financial years towards Corporate Social Responsibility.It also says that CSR spend would be mandatory for companies having a net worth of Rs.500 crore or more, or a turnover of Rs.1000 crore or more or a net profit of Rs.5 crore or more in a financial year. According to me, mandatory CSR is not a good step as " THE BUSINESS OF BUSINESS IS BUSINESS " and a company's main motive is to maximise profits in a socially responsible manner and CSR on their part has to be voluntary. The argument is that, if a company instead of spending 2 percent of net profit on CSR is creating an equivalent number of jobs around it then it is no less than a CSR activity. Also this mandatory requirement is like an additional tax imposed or an unnecessary burden on the companies in this globally competitive environment. Lastly, quoting noted economist Milton Friedman's view which says, " There is one and only one social responsibility of business: to use its resources and energy in activities designed to increase its profits so long as it stays within the rules of the game....[and] engages in open and free competition, without deception and fraud."
Response:
The Companies Bill, 2011 mandates that companies will have to s pend two percent of their net profits in previous three preceding financial years towards Corporate Social Responsibility.It also says that CSR spend would be mandatory for companies having a net worth of Rs.500 crore or more, or a turnover of Rs.1000 crore or more or a net profit of Rs.5 crore or more in a financial year. According to me, mandatory CSR is not a good step as " THE BUSINESS OF BUSINESS IS BUSINESS " and a company's main motive is to maximise profits in a socially responsible manner and CSR on their part has to be voluntary. The argument is that, if a company instead of spending 2 percent of net profit on CSR is creating an equivalent number of jobs around it then it is no less than a CSR activity. Also this mandatory requirement is like an additional tax imposed or an unnecessary burden on the companies in this globally competitive environment. Lastly, quoting noted economist Milton Friedman's view which says, " There is one and only one social responsibility of business: to use its resources and energy in activities designed to increase its profits so long as it stays within the rules of the game....[and] engages in open and free competition, without deception and fraud."
Subscribe to:
Posts (Atom)