Most of the companies were not happy with the mandatory CSR and wanted that the law should not specify any amount to be spent on CSR activities and should be left to the decision of the board. According to the companies making CSR mandatory takes away from its core principles and what companies spend on community welfare, education, health, development and environmental activism is for them to decide.
Voluntary CSR in India, however, has a mixed track record at best. In 2006, despite the economic boom, India spent only $5 billion, or 0.6 percent of its GDP on corporate responsibility whereas Americans give about $307.75 billion, or about two percent of GDP, to charity annually.
In 2009, voluntary guidelines suggesting the same two percent expenditure was issued, but CSR spending has not seen sufficient movement since then.
There are many objections that are made to mandatory CSR spending which are as follows:
• It creates market inefficiencies that may damage the economy in the long run as India has been doing quite well under its liberal economic regime and its GDP has been increasing at a rate of almost eight percent per year.
• Even the lower classes have benefited from privatization and globalization. Though millions of Indians remain in poverty, millions more have broken past the poverty line and are edging closer to a middle-class existence.
• It might put India at a competitive disadvantage in the global marketplace and might slow or reverse the country’s near-miraculous growth.
The proposal is not developed or regulatory enough. Without a coercive enforcement mechanism, it is unlikely that the law would garner sufficient compliance.