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Despite its stated Act East Policy, India is often caught not looking eastward

India’s Act East Policy Not Reflected in the Country’s Corporate Social Responsibility Initiative

For those in India’s Northeast, the idea of corporate social responsibility, CSR, began dawning the hard and painful way in the 1990s, long before the 2013 formal provision for it was introduced under Section 135 of the Companies Act, making it mandatory for companies of a certain level of profitability to register and contribute towards a consolidate CSR fund.

Assam’s rebel group United Liberation Front of Asom, ULFA, was at its peak then, inspiring a sense of what Irish poet WB Yeats called “a terrible beauty” among a large section of the Assamese population – then besieged by a feeling of doom of demographic and economic marginalisation in their homeland. In the popular Assamese imagination of the time, ULFA were romantic warriors playing Robin Hood – robbing the rich to help the dispossessed. Those were heady days indeed, marked by a peculiar public psychology of a cocktail of aversion of the violent social turmoil but laced nonetheless with a dose of romance.

One of the things ULFA began doing was to target industries, especially extractive ones, based in Assam accusing them of a colonial agenda of draining the state of its resources for their profit. Those in tea, timber and oil became the prime targets of ransom kidnapping and assassination, and many of them were told to shut and leave.

As water finds the path of least resistance, this immutable law of nature was also what these companies sought. To buy their peace, they began investing in the communities amongst whom they worked, building schools and health infrastructure, extending employment oppotunities etc. What came into cognizance was, this investment was not only morally right, but also prudent business strategy, for in the long run, for any business to run smoothly, the societies in which they functioned had to be made stakeholders.

Much waters have flowed down the Brahmaputra and many other rivers in Northeast. Like many other rebel groups in the region, ULFA is still very much around, but the sheen of romance that once knighted them in popular imagination has thinned, relegating them into a corner of public consciousness. But one of the better legacies they may have left behind, at least in Assam, is a warmer culture of symbiotic relationship between corporations and the communities amongst whom they build their business foundations. It would also not be too far fetched to speculate that the clause introduced in India’s Companies Act in 2013 which made corporate contribution to the CSR fund compulsory had the Assam experience as a determinant, at least subconsciously.

Section 135 of the Companies Act, 2013 requires every company, private limited or public limited, which has a net worth of Rs. 500 crore or more, or a turnover of Rs. 1,000 crore or more, or a net profit of Rs. 5 crore or more during any financial year, to spend a minimum of 2 percent of the average net profits they have made during the three immediately preceding financial years towards upliftment of society.

According to a brochure released by the Federation of Indian Chamber of Commerce and Industries, FICCI, during a recent workshop in New Delhi on CSR, in the year 2020-2021 the accumulated funds under the CSR, is a whooping Rs 1 trillion or Rs. 1 lakh crore. The brochure also notes that the eight states of the Northeast (Sikkim included) received only Rs. 196.39 crore of this amount, which is much less than 1 percent. According to the Government of India CSR website, of the Rs. 196.39 crores that came to Northeast, a state like Manipur received only Rs. 10.3 crores from 42 different companies during the financial year.

This is unfortunate, for going by most parameters, Northeast certainly deserves more. Its forest and mineral resources are rich and many companies have made capital of this. In other sectors too Northeast is a prime market for many. Take just the case of one prominent company – Indigo Airlines. When the company decided to enter the aviation market as a low cost passenger carrier in 2006 with just one aircraft, the route it chose was Delhi to Imphal via Guwahati. Today Indigo operates 1600 flights daily to 101 destinations and still does substantial business in Northeast, so there is no reason why a respectable share of its CSR contribution should not come to Northeast. The same can be said of so many others dealing in a range of products – baby foods to automobiles.

Again, from the point of view of developmental responsibility of the government, data again suggest Northeast is not getting its fair share. Its rural population is 84 percent, far higher than the national average of 70 percent. People living below the poverty line in Northeast region is 34.28 percent, again far above the national average of 26.1 percent. And yet, when it comes to allocation of CSR funds, meant precisely for social upliftment, these states are virtually side-lined.

It must be added here that the scale for measuring poverty may be a little tricky here, for as in most traditional agrarian societies, a great number of whom are tribals depending on forest recourses for sustenance, the case is also generally of a people with stomachs full but wallets empty. This also is an indication that climate change can alter their livelihoods means drastically, so investment in fighting climate change can be directly relevant to them.

Despite these caveats, the figures are so starkly weighed against the region that even FICCI thought it fit to have a special session on Northeast during its Delhi conference to look for a more just and equitable way forward. The question is, why exactly is Northeast in the blind spot of CSR investment. Is this yet another indication that India intuitively does not look east and its obsession remains to the west of its border. This despite its much-vaunted Look East Policy, now rechristened Act East Policy. As the late Ashok Mitra noted in a column, in 1937 when Burma (now Myanmar) was separated from India as per a provision in the Government of India Act 1935, there was not a squeak of protest in India. But when Pakistan was separated from India ten years later, there were unprecedented carnages that left unimaginable tragedies both sides of the border. Is it not time yet to make amend and readjust this national vision.

This article was first published in The New Indian Express under a different headline. Read Here

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