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Wednesday, September 5, 2012

Corporate Social Responsibility – Through Ages

Corporate Social Responsibility – Through Ages
- Sai Papineni                       

The Great Depression had brought into focus a few lacunae in the system and forced the intelligentsia to look closely at the capitalist ideal; and the concept of Corporate Social Responsibility had its genesis; a concept made popular by the management thinkers like Drucker in mid 20th Century. In India the word began to make rounds very recently – of course, true capitalism here is a new, post-liberalization phenomenon – but is it really new to us?  
If one explores various phases of India’s long and illustrious history, there are many phases during which welfare activities were undertaken by the the mercantile and industrial enterprises. But the social processes and particularly the parlance differed significantly from what we understand it as today. 

Let us simplify the term CSR into easily comprehensible words…

“Voluntary alienation of one’s wealth for the general good of many”

This may not explain the concept in its entirety, but it should suffice for now. The contexts, the motivations and the priorities differed from time to time. However, in this simplified form, it is not new to India from the earliest times known.
Dāna is a term well known from the earliest literary tradition available to us – Rig Veda. The number of instances, of a wealthy patron – a warlord or a landlord –, giving away cattle or gold or some such movable tokens of wealth to the officiating priests at the sacrifices, abound in the Vedic tradition. The size of these donations preempts their enjoyment by a single individual or a family; they were essentially meant for the community benefit and differ from the mandatory taxes such as Bali and Bhāga.
The concept of taxing the business as a means to state led welfare schemes is part and parcel of civilized societies from the times immemorial. When a strong welfare state exists, the focus on CSR becomes irrelevant. The focus on the direct contribution of non-government institutions, therefore, is inversely proportional to the people’s confidence in state-led welfare processes. In the occident, the church became the agent of welfare and the tithes a means for the welfare of the parish. Its prominence increased with the weakening state authority during the dark ages. Its Indian parallel is the rise of temples as nuclei of rural communities.  
Therefore, religious sanction to the endowments made by commercial institutions and wealthy individuals has been a fact that persisted through ages in different social and religious milieu. The individual motivation remains the same, “Donor acquires merit (Puṇya) and also material wealth (Artha) in one’s lifetime”. Is it in reality different from the motivations of a modern corporation? To me they are essentially the same – a long-term image building for the corporate brand and improved economic conditions leading to a stronger customer base.
Now, if you look back at the historical times, one may argue that the purpose of donations had nothing to do with the welfare of people, even though they might have had indirectly contributed to the community benefit. However, there is no denying the fact that some literary and epigraphic records do establish that the donors were conscious of the purpose for which the donatives were made.  

A later codicil of the Mahabharata story, the Anusāsanika Parva, differentiates dānas into two distinct types – Işṭa & Pūrta. While the Işṭa dāna is a honorarium for officiating a ritual, the Pūrta dāna was specifically towards such activities like digging wells, repairing irrigation tanks and building of temples. While Işṭa dāna is mandatory, the Pūrta dāna is voluntarily made by the Landlord / Merchant. 

 Arthashāstra is a manual on statecraft representing a strong unitary state – probably 2000 years old – and primarily deals with the welfare initiatives that are state led. A modest provision in its tax collection and administration code gives discretion to the collectors to waive the duties if the articles of trade are meant for community benefit, indirectly pointing to the fact that such practices had taken place even though at a low key.

Vinaya piṭaka, from the Buddhist canon mentions such terms as Shréni, Puga, Nigama etc. which denote corporate organizations or guilds that are engaged in industry and trade. There were references of such guilds providing regular supplies of food and clothing not only to the monks, but also to the destitute and the disabled.

There are several inscriptions of early historic period referring to wealthy persons investing in guilds towards some pious endowments, the interest from the investments to be utilized for the needy and towards improving public amenities. For example, an inscription from Junnar refers to an investment with one Konachika guild for the purpose of planting karanja and banyan trees on the highways. 
Dharmāta, the practice of setting aside a part of the profit margin towards some pious activity is followed even today by the most traditional Jain and Marwadi business houses  in India; a practice that had its origins in the earliest Jain literature dating back to the pre-Christian times.
Sharia, the Islamic law book institutionalized the process, by making it mandatory for every pious businessman to set aside a portion of his income towards alms for the poor and the destitute.

Medieval texts list Sapta Santānas, seven kinds of progeny – the legacies one may leave to improve one's merit afterlife – and these are namely, Rest house, Irrigation tank, Book, House, Temple, Orchard and New Village Settlement. A large number of inscriptions spread across the country, belonging to this period, evidence contributions made by the wealthy merchants and manufacturing groups towards such activities like building, maintenance and repair of community infrastructure. 

This brings us to the fact that the Oriental affinity to contribute a part of the wealth towards the general welfare of the community is very much alive even today. During the years of colonial high tide, the institutional endowments dwindled as the economy suffered. But the instinct was internalized at an individual level, which is evident from the number of alms-seekers at every traffic junction in India. At the institutional level there certainly is a discontinuity. With the rise of modern enterprise and businesses, and the growing disenchantment with state apparatus, a need exists to channelize this proclivity into effective strategies to address the current social needs and priorities.
But … how true is our current crop of NGOs to this purpose?


  1. Sai,
    some thoughts.. kings encouraged musicians, artists and other creative persons, who could survive and thrive only because of their largesse. One could also include the building of shelters, dharmasalas, planting trees on highways and such other policy decisions as part of CSR..

    1. No doubt, kings did undertake such measures. But monarchy is a form of government. If government takes up welfare measures it is doing it out of taxpayers' money. Corporate Social Responsibility is a function of business enterprises' initiative. Of course there were many instances of wealthy individuals patronizing musicians, poets and artists. Building dharmasalas is one of the seven - Saptasantanas - legacies left by many merchants through ages.