Mandatory corporate social responsibility as a vehicle for reducing inequality: an Indian solution for Piketty and the millennials

We argue that mandatory Corporate Social Responsibility (CSR) could contribute to ameliorating inequality. Instead of the tax increases and other confiscatory proposals advocated by scholars such as Piketty, we put forth a model for legislation in the United States requiring companies (excluding SMEs) to spend 1% of their annual profits on designated CSR activities. Our proposal is based upon India's innovative CSR law but has important differences. The paper provides a detailed analysis of the CSR provisions in the Indian Companies Act and related rules. It also offers an empirical examination of CSR activities of companies in the NSE50 since the adoption of the Companies Act, 2013, showing that companies have broadly embraced the legal mandate although implementation remains patchy due to inadequacies in the legislation.