2% RULING: A STEP TOWARDS DEVELOPED INDIA

The 2% ruling introduced by the Indian law on 1^st of April 2014 as a CSR law has made a huge impact on Indian firms. It’s mandatory for the companies to share 2% of their net profits for a charitable cause. India is the first country to mandate a minimum spend of 2% of the net profit on corporate social responsibility initiatives. But a question that arises in mandating this law in a country like India which is facing multiple socio-economic challenges is that will it be able to utilise these funds properly?  NGOs and business debate on this.

India being a country were only 36% of our population is having clean toilets to access, in such a surrounding while our government is able to establish social economic development? Our government has set some specific guidelines on how CSR activities have to be handled. For this a CSR committee that include independent directors will be made in each company. It will be responsible for preparing a detailed plan of the activities, expenditure and the type of activities, roles and responsibilities of various activities that have to be undertaken. The board is required to approve the CSR policy and disclose its contents in their report and also they have to publish the same details on their company’s official website. If the company is unable to spend the prescribed amount, the board is required to specify the reasons for the same in their report.

The government suggests the companies to include activates like promote education as India is a developing country and if we want to see ourselves among the top 10 developed countries we have to educate our people and specially we have to focus on girl child education as one literate women can educate many others . Companies like Wipro and TATA have invested large amount of their profits into Education. Also we have to focus on environmental sustainability and protection of national heritage. These activities are undertaken my NGO foundations established by the companies.

We all have to make it our moral responsibility to help become a developed country and if this law is followed properly India soon will be a developed nation.