ABC Ltd. is a large transnational company having diversified business activities with a huge shareholder base. The company is continuously expanding and generating employment. The company, in its expansion and diversification programme, decides to establish a new plant at Vikaspuri, an area which is underdeveloped. The new plant is designed to use energy efficient technology that will help the company to save production cost by 20%. The company’s decision goes well with the Government policy of attracting investment to develop such underdeveloped regions. The Government has also announced tax holiday for five years for the companies that invest in underdeveloped areas. However, the new plant may bring chaos for the inhabitants of Vikaspuri region, which is otherwise tranquil. The new plant may result in increased cost of living, aliens migrating to the region, disturbing the social and economic order. The company sensing the possible protest tried to educate the people of Vikaspuri region and public in general that how its Corporate Social Responsibility (CSR) policy would help overcome the likely difficulties of the residents of Vikaspuri region. In spite of this the protests begin and some of the residents decided to approach the judiciary as their plea before the Government did not yield any result.
(a) Identify the issues involved in the case. (b) What can be suggested to satisfy the company’s goal and to address the residents’ concerns ?
Approach · directive: “identify / what can be suggested”
What it asks · (a) List the ethical, economic, social and legal issues where corporate growth meets community disruption; (b) suggest steps that meet the company's goals and answer the residents' concerns.
The question has 2 parts — answer each
- (a) Identify the issues involved in the case
- (b) Suggest what can be done to satisfy the company's goal and address the residents' concerns
Open with · The case joins a genuine public good, investment and jobs in a backward area, with a real cost for a community that was not consulted early.
Cover
- Stakeholders: the company and its shareholders, its employees and future workers, residents of Vikaspuri, migrants, local traders, the Government and courts, and the environment.
- (a) Development versus disruption: jobs and growth for a backward region against rising living costs, migration, and loss of a peaceful social and economic order.
- (a) Profit versus responsibility: the 20% cost saving and tax holiday favour the company, while CSR appears late and is used to persuade, not to plan with residents.
- (a) Government, rights and equity: promoting investment while protecting citizens; residents' right to be heard; gains go to shareholders and migrants, costs to residents.
- (b) Engage first: social impact assessment, open consultation and a joint committee of company, residents, panchayat and administration; consider mediation to avoid long litigation.
- (b) Local benefit: preference in jobs and training for locals, support for local suppliers, and CSR built on needs the residents choose in health, schools, water and housing.
- (b) Manage change: planned housing, water, transport and services, land-use control, independent monitoring and a grievance cell; link the tax holiday to local jobs and community commitments.
Close with · Growth that shares its benefits and involves the affected community from the start meets the company's goals and the residents' concerns together.
Add value (verified)
- Gandhi on trusteeship (Harijan, 3 June 1939): wealth gained by legacy, trade or industry does not all belong to its holder; he is entitled only to an honourable livelihood. Unit 6: Gandhian Perspective — IGNOU eGyanKosh (archived copy) ↗“In his editorial in Harijan (3 June, 1939) the concept of trusteeship was elaborately stated: “Suppose I have come by a fair amount of wealth either by way of legacy, or by means of trade and industry, I must know that all that wealth does not belong to me, what belongs to me is the right to an honourable livelihood, no better than that enjoyed by millions of others.”
- Principle 4 of the MCA's National Guidelines on Responsible Business Conduct (2019, later than this paper): businesses should respect the interests of, and be responsive to, all stakeholders. National Guidelines on Responsible Business Conduct — Ministry of Corporate Affairs (archived copy) ↗“Principle 4: Businesses should respect the interests of and be responsive to all its stakeholders. National Guidelines on Responsible Business Conduct”
- Section 135 of the Companies Act, 2013: qualifying companies must spend at least 2% of average net profits of the three preceding years on CSR, giving preference to the local area where they operate. Statutory Requirements for CSR (Section 135, Companies Act, 2013) — CSR Portal, Government of Odisha ↗“shall ensure that the company spends, in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy: Provided that the company shall give preference to the local area and areas around it where it operates”
- The 2nd ARC's 9th Report: aligning business operations with social values is the essence of CSR and the basis of business's contribution to social development. Second Administrative Reforms Commission, 9th Report: Social Capital – A Shared Destiny (DARPG, archived copy) ↗“As far as the corporate sector is concerned, the alignment of business operations with social values, which is the essence of Corporate Social Responsibility (CSR), is at the heart of its ability to contribute to social development alongside economic development.”
Question: UPSC's CS (Main) 2016, GS Paper IV — paper ↗. Approach: Minimalist IAS, checked 1 Oct 2026 (how we verify) — UPSC publishes no model answers. ·
Model answer · 420 words (UPSC limit 300) · Minimalist IAS
Gandhi's trusteeship held that wealth made through trade and industry does not wholly belong to its maker; beyond an honourable livelihood, it belongs to the community. ABC Ltd's plant tests that idea: a real public good, planned without the consent of those who will bear its costs.
Stakeholders
- ABC Ltd and its shareholders; present and future employees; Vikaspuri's residents and panchayat; incoming migrant workers; local traders and farmers; the Government, which offers a five-year tax holiday; the judiciary; the local environment.
(a) Issues involved in the case
| Party | Gains | Costs or concerns |
|---|---|---|
| ABC Ltd | 20% cost saving, tax holiday | Protests, litigation delay |
| Residents | Jobs and services, if shared | Living costs, migration, lost calm |
| Government | Investment, regional growth | Public trust, order |
- Development against disruption: jobs and growth for a backward region against a rising cost of living, inward migration and the loss of a tranquil social order.
- Unequal distribution: savings and tax benefits flow to shareholders, while residents bear the adjustment uncompensated.
- Consent and voice: residents were informed after the decision, not consulted before it, so their right to be heard shrank to public relations.
- CSR as persuasion: using social responsibility to manage protest turns a duty into a tactic.
- Governance gap: the Government ignored the residents' plea, pushing them to court and adding delay and mistrust.
- Sustainability: energy-efficient technology is a real good, but housing, water, sanitation and policing for a larger population are unplanned.
(b) Meeting the company's goal and the residents' concerns
- Engage before building: a social impact study with public hearings; a joint committee of the company, panchayat, residents and district administration; mediation to settle the case early.
- Stakeholder governance: since then, the MCA's National Guidelines on Responsible Business Conduct (2019) ask businesses to "respect the interests of and be responsive to all its stakeholders".
- Share the benefits: training and job preference for local youth, contracts for local suppliers; the Companies Act, 2013 requires qualifying companies to spend at least 2% of average net profits on CSR, with preference to "the local area", so let residents choose the priorities.
- Manage the change: worker housing and transport so migration does not overwhelm the town; land-use rules against speculation; independent environmental monitoring; a time-bound grievance cell.
- Align incentives: link the tax holiday to verified local jobs and community commitments, and publish progress.
The 2nd ARC called the alignment of business with social values "the essence" of CSR. Growth planned with a community, rather than announced to it, protects ABC's cost advantage and gives Vikaspuri jobs, services and a voice.
Written by Minimalist IAS from facts checked at source (how we verify) — a little fuller than exam length, so every part of the question is covered; in the hall, keep the structure and trim the detail. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.