2% for CSR - are you kidding Mr Minister?

This is the latest from the Indian government. While we are already dealing with so many scams, the govt is busy creating a platform for one more (or many more). Essentially, the govt wants companies to set aside (and spend) 2% of their net profit on CSR (Click here for the news article).

What does it mean? If there is a company with 5,000cr (US $1B) as revenue with 20% profitability, they need to spend 20cr on CSR. That's lot of money!

While I have fundamental issue at the philosophical level, there are others at operational level... And while the exact meaning of CSR is yet to be defined, India inc have their strategy ready... This is what is likely to happen in most of the cases - a set of shell companies will be created in the form of NGO or charity organizations... may be 2% of the 2% will be spent on real charity and 98% will be routed back to the officials of the company and the charity organization...

There you go - yet another opportunity to convert white into black without impacting the financials of the company...

Before the skeptics jump on me for doubting the integrity of Indian businesses (HA!), here is another perspective - the people/companies who want to do it are already doing it... they don't need a law... the ones who don't want to do it, will never do it... whatever it comes to... because they believe that charity starts at home... and ends at home...

So, Dear Mr Deora (and Mr Sinha for that matter), you must really be kidding...