Mumbai (Maharashtra) [India], September 2 : Corporate social responsibility (CSR) regulations should give corporates greater flexibility to direct mandated spending towards grassroots development, while allowing companies to benefit through stronger social capital and goodwill, which can help raise per capita incomes, said Former Union Cabinet Minister Suresh Prabhu.
Speaking to ANI on the sidelines of Confederation of Indian Industry (CII) National CSR Summit, Prabhu said CSR regulations should allow corporates to tailor their spending to local needs while ensuring tangible and measurable benefits for communities.
He said such investments would also help companies build social capital and goodwill, creating a "win-win" situation for businesses and society.
"CSR mandates that corporates must spend part of their post-tax profit for CSR activities and which are the allowed activities notified by the Department of Company Affairs from time to time. Government also should regulate in a way that will not be counterproductive," he said.
Prabhu said corporates should have some flexibility in deploying their CSR funds, but the spending must result in "tangible" and measurable outcomes.
Adding to this, Prabhu said raising per capita income would require a stronger focus on grassroots development, which in turn could create a virtuous cycle of higher demand, purchasing power and economic growth.
"Per capita income will increase only when there is a grassroots activity," he said, adding that development across districts would be key to raising incomes and driving broader economic growth.
Prabhu also shared his views on India's GDP growth in the latest quarter, stating the expansion appeared broad-based, with both the services and manufacturing sectors performing well alongside agriculture. However, he cautioned that GDP growth alone does not fully capture development at the grassroots level, underscoring the need for greater focus on local development through CSR initiatives.
Prabhu described the growth performance as "commendable" given the headwinds facing the global economy, including geopolitical tensions and conflicts in India's neighbourhood.
On exports, Prabhu said India was not making a mistake in its current export strategy, and emphasised the importance of strengthening the country's geopolitical engagement with other nations to support export growth.
"...Exports will happen when there is a geopolitical, also engagement with the countries. So it's like an air cover that is necessary when the army wants to move down...," he said.