A critical analysis of Corporates evading statutory norms

A critical analysis of Corporates evading statutory norms

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Bibhu Prasad Mohanty

Independent Development Consultant and Trainer

Before Companies Act 2013, CSR was voluntary social activity of corporate bodies. Today it is a wonderful condition to have a policy that mandates all the leading corporates to become ethical and responsible for the society and its development. Before this there were other arrangements also which were made statutory. Unfortunately those were ignored, evaded and forgotten by corporate houses, MoEF (Ministry of Environment and Forest) and Directorate of Environment and Forest in respective states in India.

One such example of evation is illegal mining in Odisha. As per report given by Shah Commission, the Odisha illegal mining scam is of Rs. 59,203 crore and illegal iron and manganese ore, amounting to 22.80 crore tonnes was extracted illegally from the state for almost a decade. Shah Commission has demanded a CBI investigation into the matter, warning that too many powerful people and businessmen from Odisha and outside the state, bureaucrats and politicians are involved.Corporate Watch (2)

CSR activity has become an eye wash as people forgot many of the statutory benefits from the companies which were directed by MoEF as per the Environment clearance (EC) compliance. Those legal arrangements were appearing very stringent and ethical too. But in India those statutory norms are generally evaded by corporate bodies.

Corporate houses / industries/ mines get EC (Environmental Clearance) from Ministry of Environment and Forest. MoEF grants EC under certain statutory conditions. One such condition is community development component. As per the norms the polluting projects are supposed to spend 5% of total asset cost, at least within 25 km radius of the project or establishment. They should undertake development of local population in the areas of health, education, environment, infrastructure, women, children, livelihood, livestock, and biodiversity and so on. Unfortunately they do not do that. At the time of reporting or making compliances they show what they are doing under CSR. It has been a practice by almost all the industries, mines and so on.

MOEF must understand CSR activity is part of profit and community development what is mentioned in Environmental Clearance Act is integral part of the project cost. For years these corporate houses have been exploiting our mother land by evading their duty & expenditure towards environmental compliance. Every year our country loses development possibilities worth of billions of rupees. This is a sheer cheating by corporate houses and polluting organisations, also a huge lapse by this Ministry. This fund can be of great use in climate change aspects and mitigate many of the climatic vagaries in the country. Compliance to environmental clearances by these polluting bodies can contribute in very constructive manner by restoring the environment with the help of local communities and make a great difference in the region.

Similarly other aspect of Environmental Clearance is mostly based on analysis of Environmental Impact Assessment (EIA) Report submitted by corporates houses before MOEF. Many reports do not consult Biodiversity Act 2002 and Protection of Plant Variety and Farmers Right Act (PPVFR) 2001 which would be a great support in understanding the significance of various genetic materials, their significance and contribution in day to day life, their relevant presence in that geographical location and supporting the efforts of conserving, maintaining the rich natural resources and biological resources in our country. It must be mentioned here that biological or genetic resources of a country is the basic development material that ensures future growth and sustainable development on earth. India is losing the richness of its biological resources because of rapid growth and expansions of the industrial companies and mining houses. Therefore the corporates have to take the responsibility to enlist all the genetic materials of the area where they are establishing their project and that must be endorsed by local self-Government and local people those who are dependent on those materials. Similarly by consulting Protection of Plant varieties and Farmer’s Rights Act 2001 changes can be brought to protect the crop genetic resources from loss due to modern development activities, infrastructure development, industrialisation and mining activities.

Another clever approach has been the practices of certain fast growing corporate bodies where they try to avoid spending for ethical and people’s development activities. India has got a Land Acquisition Act 1894 revised in 1956 under which there were several land acquisition for mining operation and industrial establishment. This Act was silent about the corporates role on displaced families. Fortunately after many years of struggle and demand today the new Land Acquisition Act 2013 has included Resettlement and Rehabilitation activities for displaced people. Several states in India have their own resettlement and rehabilitation policies for people those who are displaced because of development projects, industries etc. To evade the statutory norms and usual delays Government makes in Land Acquisition process. Through Land Acquisition Act, it was observed that corporate bodies are directly purchasing land from people. It is a fact that land purchasing becomes very fast and project work are commissioned in time. But the resettlement package of companies in many cases are not defined or avoided and very little is given to the people as a mercy to land sellers in lieu of selling land to company; whereas those are the rightful gains from development projects. It continues till the companies achieve their land mass target. People loose livelihood, confidence, dignity as they sale land; they miss the mental peace and social status. All these are done with help of middlemen, corrupt politicians, hooligans and excessive use of police forces or by frightening people. These entities get maximum benefit out of the situation that is created because of these companies.

There are resentments of people against these wrong practices by companies in different parts of the country. These purposes of displacement due to industries are defeated in this process. It is observed that laws are not protecting displaced people from drudgeries and miseries they suffer in this case. People and political entities are not aware of the weaknesses in the laws. That leads to the situation where common people lose their rights and suffer. The most painful thing that happens is that the common people lose their identity.

In the name of development these big projects are becoming the cause of poverty. They are not only committing crime against man but also becoming the source of notoriety in the region. They are becoming power centres influencing life of millions mostly in a negative way. In spite of availability of professional manpower in the project area never use those resources in the companies. Due to requirement of large scale human resources for big projects community people get some livelihood through labour work and contract business for a short time. Except this, they have no benefit at all. This does not address sustainable development requirements in the area. My recommendations for improving the situations would be as under:Close-up of a Calculator and Pen on a Financial Newspaper.  Blue-toned.


1. Taking the flaw in to consideration, I recommend making changes in compliance report format. It should have enough space and privilege to accommodate the detail of expenditure in clear terms. To do this the action plan in relation to the project should be well spelt in advance by the corporate to MOEF and Pollution control board, District collector and Director of Environment and Forest, Directorate of Industry and mines, Directorate of concerned Departments dealing with various development and welfare work in the state. Superficial data input in the project report allows such flaws to happen. We have to be very careful about it.

2. There should be a watch dog body formed at state level like pollution control board to conduct socio-economic-environmental audit of the community development activities and CSR performances of the companies.

3. Corporate houses must display the value of the projects under infrastructure development, community development and CSR in public places as Government does.

4. Welfare projects should be linked to existing Government programs. No duplicity should be allowed in the area in terms of programs and projects. Therefore necessary clearance should be part of the implementation of the projects of corporate houses. It will help state Government, local panchayats and communities to have direct involvement in the execution of projects.

5. Social and environmental audit should be part and parcel of community development work by corporate houses. State Pollution Control Board may be take care of pollution. But who is looking after loss in genetic resources in the area. Therefore Biodiversity Act must be executed with power and authority. People’s biodiversity Register should be part and parcel of EIA and EC compliances. Necessary monitoring and evaluation should be part of the project not of profit.

6. Taking above points in to consideration, mass scale non-polluting livelihood and livestock development program should be encouraged in such a manner that people in the project area should feel no hostility towards the corporate houses. Because corporate bodies are also part of development process. They should have enough protection and comfortable operational facilities from Government and communities both. It will be a win-win situation for both.

7. Resettlement and Rehabilitation packages should be part of projects for both the tactics of land purchase process i.e. for people who sale land as individual and those who sale under Land Acquisition Act 2013.

8. Companies must design and implement the best resettlement and rehabilitation packages they are offering to people which are much better than envisaged R&R policies in state and Land Acquisition Act. The authority that is looking after R&R at district level must be informed and involved in the process.

9. Revenue Department should be made responsible for the information sharing process between company and R&R authority at district level. If such system is not there in the district, DC should be made responsible for this.

10. Communities, civil society and learned bodies should be involved in the process of monitoring the public good by the companies involved in.

About the author

CSR VISION is India's (probably World's) first monthly magazine in print devoted to CSR and Sustainable Development for bringing together all stakeholders of SUSTAINABLE DEVELOPMENT at a global and local levels and act as a platform for promoting strategic CSR and sustainable development practices through dissemination of information and knowledge.