In the world’s second-largest populated country, it is no surprise that access to health care is highly dependent on the socio-economic status of an individual. The expensive private sector is the main source of health care for around 52% of households in urban areas and 44% of households in rural areas. For the rest, despite trust-deficit in the public health system, access to health care through government hospitals remains as the only option available. With the per capita public expenditure on health of Rs.1,657 per person and ~1.5 % of GDP allocation on health, India stands amongst the lowest in the world. For 1.3 billion people, there are only 7,13,986 beds in 25,778 rural and urban hospitals combined. This under-funded, patchy public health system, with regional imbalances, poses special challenges for the country’s disease containment strategy.
As a result of inadequate planning and growing demand for health care due to the novel coronavirus, 1093 dedicated hospitals were constructed adding approximately 2 lakh more beds to the total capacity. An estimate by Brooking shows that India, due to overwhelmingly fewer ventilators, isn’t capable of handling larger demand; according to the projections a maximum of ~ 57k ventilators as a whole are available in the country. India conducts 1,189 tests per million which is very less when compared to the rate of the U.S. (26,310 per million). According to an estimate, to keep up with the increasing rate, India in July would require 47 crore testing kits to detect projected positives of 1.8 crore peoplev. A similar spike is required in ventilators, isolation beds, ICU beds, and doctor-patient ratio- 1:1445.
In the wake of COVID-19, a circular issued by the Ministry of Corporate Affairs on the 23rd of March, 2020 has clarified that spending CSR funds for COVID-19 related activities shall qualify as CSR expenditure. It includes activities under items (i) and (xii) of Schedule VII relating to the promotion of health care including preventive health care and sanitation, and disaster management. Five days later, the Ministry has offered an even better option to companies stating that any contribution made to the “PM CARES FUND” – which has been set up to provide relief to the affected by any kind of emergency or distress situation – shall qualify as CSR expenditure under Companies Act 2013.
In this context, with companies likely to donate large amounts at once, the future of CSR activities remains uncertain. The blog thus focuses on the role of CSR expenditure on the health care sector and its contribution during the COVID crisis.
Rs. 2127 crores of CSR expenditure on the health care sector alone……
In India, the CSR contributes to the health sector by engaging in various activities ranging from building the multi-specialty hospitals, medical research centres to medical camps, and awareness campaigns. As per the latest report by the Ministry of Corporate Affairs, education stood atop with Rs.4478 crores out of Rs.13326 crores during FY 2017-18 followed by health care and sanitation with Rs.2127 crores. The CSR expenditure on the health care sector has increased from Rs.1847 crores in FY 2015-16 to Rs.2127 crores by FY 2017-18**. The same has been noticed in the count of Public Sector Undertakings (PSU) and private firms which increased from Rs. 16,548 crores in FY 2014-15 to Rs. 21,337 crores in FY 2017-2018vii.
The skewness in the pattern of CSR spending stems from the provision of ‘local area preference’ in Section 135 leaving advantage to the highly industrialized states such as Maharashtra, Karnataka, Andhra Pradesh, Gujarat and disadvantage the North-Eastern states, Bihar, Jharkhand. Niti Ayayog’s “SDG India-Index 2.0” reveals the performance index towards the goal of “Good Health and Well-being” in which Kerala topped with 82, Madhya Pradesh at 50, Jharkhand at 55, Bihar and Uttar Pradesh are at an alarming 44 and 34 respectively. The large gap between the best and least performing states in terms of SDG goal of ‘Good health and Well-being’ indicates inadequate attention towards health care which therefore calls for reprioritization of CSR funding.
Importance of WASH programme in CSR
One of the widely implemented health care activities by CSR is the WASH (Water, Sanitation and Hygiene) initiative. A report by India Sanitation Coalition (ISC) and Samhita Social Ventures shows that the median CSR WASH (Water, Sanitation and Hygiene) budget was Rs. 4.65 crores from the information published by 33 companies. The report also shows that only 20% of the companies are making Behavioral Change Communication (BCC) an integral part of their WASH projects and 14% are focusing on awareness creation. Similar to the overall CSR investments in the health care sector, Maharashtra stands out to be the most popular destination with 17 companies investing in the WASH projects. The North-Eastern states of India remain neglected even in the implementation of WASH projects by CSR.
The sanitation facilities will remain as mere structures without bringing upon a behavioral change in utilizing the facilities. The need for a holistic action towards the implementation of sanitation projects, by not just building infrastructure but also focusing on aspects such as behavioral change, addressing socio-cultural attitudes, community engagement, and capacity building, is also necessary. In addition to existing interventions, the importance of social distancing, utilization of masks and sanitizers need to be incorporated in WASH projects for better acquaintance. Even the basic precautionary measures of coronavirus align with the WASH practices. Thus, the implementation of WASH practices are the essential measures for ‘prevention is better than cure’, especially in cases like coronavirus where the vaccine is not readily available.
Shifting supply chains to fight the crisis: The contribution of CSR
Internationally, companies are contributing to the fight against COVID-19 by making changes to their supply chains. The clothing industry giant H&M is now manufacturing personal protective gear, a French perfume-making company is producing hand sanitizers whereas automobile and car manufacturing units are engaged in the making of ventilators. To strengthen the efforts of fighting the pandemic, corporate India has committed 5806 crore rupees by 3rd May 2020. The corporates are largely contributing in the form of donations to PM-CARES funds. Apart from the donations, there have been sterling efforts from big corporate houses. Reliance Foundation has set up India’s first COVID-19 hospital, Vedanta collaborated with the Ministry of textiles to manufacture PPEs, few other companies have set up quarantine and isolation facilities. However, many corporate companies are confined to the provision of medical supplies, hygiene products, distribution of food and groceries, awareness, and sensitization through digital platforms as their effort towards COVID-19 relief activities. As much contributing to such immediate needs is commendable, Indian CSR is lagging behind in the manufacturing of health care equipment. Keeping in mind the capability of Indian companies and the need for immediate medical infrastructure in the country, CSR needs to step up to tackle the impact of the pandemic in its own right.
Takeaways from domestic and international experiences
A 2019 study assessed 195 countries’ capabilities and health securities revealed that countries are not prepared to deal with a crisis. With an average preparedness score of 40.2 out of 100 by answering 140 questions, the results of the study came to be true in the current times. The United States appeared to be the most prepared with the highest index score in the category of detection (98.2), which is a demonstration of expertise. The reason behind the poor performance, similar to Italy, accounts for a shortage of ventilators, beds, health care personals. Whereas, the highest score India secured was in understanding “Risk”(54.4) and the least (34.9) in “Prevention”.
South Korea fared well, ranked 9th, from prior experience of handling SARS and MERS. It ramped up testing to 5000 per million, emphasized on contact tracing and strict home isolation of those with mild symptoms. Similarly, the experience of the Nipah virus in Kerala equipped it with better planning. Kerala, following the South Korean model, developed walk-in -kiosks for testing, an army of around 3 lakh people participated in disseminating information regarding awareness and providing supplies. The success lies strongly in contact tracing and isolating people for 14 days. Kerala is an example of what investment in the human capital and health sector can do when handling crises. Sweden’s achievement is controversial as it didn’t implement lockdown to flatten the curve and interestingly people showed complete compliance in the suggestions of the government. The country’s 11% of GDP allocation on the health sector provides world-class health facilities and never had to experience a shortage of personnel or equipment, as a result, it didn’t fail to earn the trust of people. Such compliance in India would be a daydream.
From the examples of regional and international experiences, the government needs to focus on greater financial allocation towards the health sector in order to improve the infrastructure. Not only the government but CSR should also prioritize health care investment. On the account of COVID-19 outbreak, corporate companies got the opportunity to assess their preparedness and their existing CSR initiatives. The pandemic has also brought a need for reinventing and restructuring the strategies to protect themselves and the larger society as well. Therefore, the CSR departments of companies should take a step ahead of what is recommended by the law to contribute to society, especially during times of crisis. As much the CSR is contributing to the larger communities in its own right, the seemingly large funds attribute to less than 1% of the total social-sector expenditure by the government. Despite the basic health care initiatives of CSR, deeper understanding and greater efforts are required to make a real impact on the community through CSR initiatives.
Way forward
One of the reasons that CSR is trying to cut down its responsibility, by donating funds and engaging in- effortless/minimal – activities, is the lack of efficient functioning. Not just donations but large MNCs should strengthen their CSR teams and implement relief activities on their own. The corporate houses, playing to their strength, should carry out “corporate social innovation”. Unlike conventional CSR activities (donations, charity work, relief activities), corporate social innovation requires huge R&D investments, strategic product innovation with social purpose, partnership with NGOs, and government bodies. Such measures are likely to create a positive impact on the immediate communities.
In times of crisis, CSR complementing the efforts of the government ensures quicker and better results. During the pandemic of COVID-19, many corporate companies are involved in the distribution of essentials. This initiative of supplying essential services can be effectively implemented by the last-mile delivery mechanism of large FMCG companies. The companies should utilize their logistic support and the vast network of traders and suppliers all over the country. A greater number of PPE kits and masks should be manufactured by the partnership of companies, NGOs, local self-help groups. To address the scarcity of ventilators and beds in hospitals, CSR needs to allocate a proportion of fund from the total to deliver them to hospitals
It is a well-known fact that lack of sanitation and hygiene practices have an irrefutable link with the spread of diseases like COVID-19. Population density, being much higher in the slums, coupled with poor sanitation, hygiene, and the deficit of awareness, social distancing becomes a difficult task to maintain. These conditions put slums at the risk of becoming potential hotspots for the next outbreak. While essentials- like food, health care, lack of potable water – therefore become the prime reasons behind non-conformity. CSR needs to formulate innovative programmes targeting the requirements and problem resolvement of slum population in a holistic approach to keep challenges like Corona at bay. In addition, the companies taking up WASH projects as their CSR activities should focus on matters such as operation and maintenance, support for long term approaches, need for a better understanding of the projects, collaborating with NGOs and other relevant players in the industry for effective implementation of projects.
Although, the contributions made by blue-chips are helping in the fight against the coronavirus, which is in a way fulfilling CSR compliance rules, the crunching economy and uncertainty over future growth might hamper the CSR investment. With unstable reduced income, companies face a situation of financially supporting their employees and/or to comply with the CSR law. If this situation persists, traditional CSR programmes which have been working and made substantial progress will be at risk along with the potential programmes necessary for the current crisis. Driven by innovation a fine balance of convergence needs to be struck between traditional activities with COVID related ones making them more holistic and resilient to future challenges. Given the unprecedented circumstances and unexpected future events, the matter at hand is whether CSR shall stick to its traditional activities like donations as a mere responsibility or take a step ahead to prioritise health care as true social responsibility
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