To call the death of V.G. Siddhartha shocking is stating the obvious. The more troubling issues are what drove him to despair. Enforcement agencies have assumed a vigilante status under Modi government. While they have a legitimate role, creating a climate of fear is counterproductive to ease of doing business.
Modi govt’s new CSR rules will take India back to Inspector Raj. Rethink mandatory CSRs
New rules for stricter enforcement of CSR funding, including mandatory transfer of the unspent funds to government-owned funds after 3 years, may take India back to the Inspector Raj. PM Modi’s government must re-evaluate the logic of UPA-era provision of mandatory spending of 2% profits by companies on CSR activities.
Ease of doing business does not mean evasion of taxes. Enforcement agencies have to be vigilant. A legitimate role if it creates fear is counterproductive to business is a nasty comment by the print.
Government should respect business. Businessmen in turn should respect, but not be afraid of, the government. Most issues should be treated as civil, not criminal. The mountain of NPAs, when investigated, led to many instances where serious violations of law had taken place. Normal safeguards in terms of independent Directors, even statutory auditors, failed. There was also a public mood of anger against some high profile absconders. With all these caveats, India Inc is all we have. No worthwhile long term foreign investment is flowing in. Some years ago, the Maharashtra government laid out the red carpet for Foxconn, which promised a $ 5 billion investment. Not one cent materialised. The businessmen / industrialists who have operated for generations know how the system works. They fund the costliest elections in the world. It is time to stop being so sanctimonious, reset diplomatic relations between Delhi and Bombay. Absent that, the economy will limp along.
2% mandatory CSR is an idea conceived during the high growth years. When a river is no longer in spate, one sees the boulders strewn over its bed. Given the extent to which profitability has eroded, my vote would be to rescind the provision. The glib answer to that is that 2% is on net profit, loss making firms have no such obligation, but that does not convince. 2. Many corporates – Tatas, as usual, very high up – have a fine record of social service. They should be encouraged to promote excellence in learning, creating fine careers for talented children born in poverty. Or in healthcare, the sort of work the Gates Foundation is doing. 3. One reason for mandatory CSR is that the state is not doing full justice to its obligations. If it was managing its finances more prudently, this good natured dadagiri would not have become necessary.