Liberalization and CSR

Since 199, with increased foreign direct investments, India has been extremely successful
in achieving a yearly growth rate of four to eight percent as part of its
reform policies in the market economy. Corporate India under the influence of
increased FDI from western countries expected itself as heading towards a
“social market economy with a human face” by incorporating CSR as its main
business strategy for creating both shareholder as well as societal value. The
objective now is to strike a balance between directly productive activities that
yield economic growth and social overhead capital that fosters social uplift.
The social market economy concept embraces the need for economic growth though
primary business functions of investment and production of goods and services
while catering to the requirement if institutional capacity building. The
understanding of the fact that wealth creation must precede wealth distribution
has propelled this shift of focus from the public sector to the private sector.
Moreover, the World Bank and its affiliate organizations came forward in 199 to
posit that over reliance on the state sector to achieve social uplift and
horizontal equity must make way for larger private sector participation. This
has been referred to as the Washington Consensus. The “World Business Council
for Sustained Development” has coined the definition of CSR as “Corporate
Social Responsibility is the continuing commitment by business to behave
ethically and contribute to the economic development while improving the
quality of life of the workforce and their families as well as of the local
community and society at large.”

The definition implied that business should exhibits the ethical behavior towards
its internal and external stakeholders as well execute its responsibility
towards the environment and society in which it operates. The western driven
CSR approach clearly differentiated between corporate philanthropy and CSR,
which referred to the integration of environmental, social and governance
factors into business strategies and operations for attaining business and
societal sustainability.

The fundamental objective of the economic reforms was to being about rapid and
sustained improvement in the quality of life if the people of India. Central to
this goal was the rapid growth in incomes and productive employment.

With India facing a plethora of development challenges and particularly with the state
retreating form economic activity, the urgency for the business community to
take up wider social responsibilities towards society is growing. Alongside
issues related to developing ethical and responsible work place, market place
and environmental practices to develop sustainable business also has started
gaining its due attention. Corporate social responsibility emphasizes the
responsibility of companies towards the stakeholders as against their earlier
focus on profit-making alone. Fears of global warming the constant exhaustion
of natural resources etc. are urging the corporate world to take social
initiative with a new perspective.