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Business News/ Companies / News/  Slums find few takers for CSR programmes
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Slums find few takers for CSR programmes

Slum development drew just Rs9.78 crore in CSR spend in FY17 due to uncertainty over the legal status

A toilet built in a slum in Geeta Colony, Delhi. Photo: Pradeep Gaur/MintPremium
A toilet built in a slum in Geeta Colony, Delhi. Photo: Pradeep Gaur/Mint

New Delhi: Although fiscal year 2017 (FY17) saw the top 10 companies by corporate social responsibility (CSR) spending contribute almost half the money that went towards CSR programmes, none devoted any funds to slum development initiatives. That’s because question marks linger over the legal status of slums. The top 10 accounted for Rs3,360.48 crore of the Rs6,809.91 crore earmarked for CSR initiatives in the year ended March.

CSR Rules, which came into effect on 1 April 2014, state that companies with a net worth of Rs500 crore or revenue of Rs1,000 crore or net profit of Rs5 crore should spend 2% of their average profit in the last three years on social development-related activities listed in Schedule VII of the Rules.

After the ministry of corporate affairs amended Schedule VII in August 2014, slum area development was added to the list. The ministry noted that the term “slum area" shall mean any area declared as such by the central or state government or by any other competent authority.

In FY17, a negligible Rs9.78 crore was spent on slum development, according to data reported by the top 100 National Stock Exchange-listed firms by market capitalization. While few private companies invested in the activity, none of the leading public sector utilities reported any spending under the head during the year. It was a repeat of the trend in FY16 and FY15.

Anushree Parekh, associate director (research and knowledge) at Samhita, a Mumbai-based CSR consulting firm, said that slum development projects are “tricky" for two reasons: the complexities involved in planning and execution, and the definition of slum development under the CSR Rules 2014. “Slums are difficult communities to work in. You need to navigate many local, social and political elements. Unlike villages, slums do not have a defined self or local government and therefore no representative voice. Moreover, slums in larger cities are tied closely to political interests," said Parekh.

Other experts say no specific reasons are responsible for this trend, pointing out that much of the CSR focus is on rural development. R. Murahari, general manager (CSR) at Power Finance Corp. Ltd, noted that companies usually implement social development projects on recommendations by state governments.

“We had proposed one project around slum development, but this initiative was cancelled by the implementing agency and they returned the funds. There are no specific reasons why there are no slums development projects."

Holistic slum development is a controversial topic as most slums are unauthorized. Yet, “non-reflection of CSR spend in slum development doesn’t mean the businesses are not working in the slums", said Adarsh Kataruka, director at SoulAce, a consulting firm. He clarified that many companies do work and spend on social initiatives in slums but on specific projects focusing on education, health and so on.

“They are not getting classified as slum development, as companies prefer to put those projects under their respective thrust areas while reporting," added Kataruka.

As some slum areas are notified or granted legal status by local authorities, these clusters tend to get access to basic amenities like water, sanitation or electricity, which cannot be availed of by illegal slums—those are the ones in most need of support.

Abhishek Tripathi, director (responsible business advisory) at PwC India, said CSR spending on slum development may not be so visible “because CSR initiatives are done in piecemeal and an ad hoc manner, and not structurally under the tag of ‘urban development’ per se".

He underlined that industry has remained largely focused on rural development. Fractured planning and responses by governments have resulted in low visibility of slum development issues, said Tripathi.

As some slum areas are notified or granted legal status by local authorities, these clusters tend to get access to basic amenities like water, sanitation or electricity, which cannot be availed of by illegal slums—those are the ones in most need of support.

“But from a CSR perspective, you cannot work with an illegal body. Since jurisdictions and boundaries of legal and illegal slums aren’t clearly defined, planning and execution of projects are extremely difficult," explained Parekh of Samhita.

Another reason could also be that most CSR initiatives are implemented around catchment areas of companies. Take the case of ITC Ltd where “the focus has been to deepen engagement in identified core operational geographies to promote holistic development, designed to respond to the most prominent developmental challenges. Needless to state, CSR interventions are introduced in newer geographies, as the company’s business operations expand", said Ashesh Ambasta, executive vice-president and head (social investments) at ITC.

Soumitro Chakraborty, director of Delhi-based consulting firm Finnovation, says CSR initiatives on slum development tend to create a “conflict" with the demographic dividend of the local area where the company operates because of relocation and redevelopment issues.

“Also, there is a sense of auxiliary treatment of the CSR by the private sector by and large and therefore, companies avoid especially this segment because slum development, if not treated with absolute sincerity and foresight, can lead to catastrophic socio-political crises," said Chakraborty.

Seema Chowdhry contributed to this story.

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Published: 17 Oct 2017, 12:11 AM IST
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