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.
It asks 2 things — 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 · Corporate growth and regional development against a community's right to shape its own future: a real public good, planned without those who will bear its costs.
Cover
- Stakeholders: ABC and its shareholders, employees, residents, panchayat, traders and farmers, migrants, the Government offering a tax holiday, courts and the environment.
- (a) A table of gains and costs for ABC, residents and Government; development versus disruption; gains to shareholders, costs to residents.
- (a) Consent and voice: residents informed, not consulted; CSR used as persuasion, against Gandhi's trusteeship; an ignored plea; unplanned civic load.
- (b) Engage first: social impact study, public hearings, a joint committee and mediation; responsible business conduct guidelines (since then, 2019).
- (b) Share and manage: local jobs, training and suppliers; CSR spending (2% of average net profits, local-area preference) on residents' priorities; housing, transport, grievance cell.
- Long-term: link the tax holiday to verified local jobs, build skills and civic capacity, and make early consultation a condition of incentives.
Close with · The 2nd ARC's view that aligning business with social values is the essence of CSR; growth planned with a community protects ABC's cost advantage and gives Vikaspuri jobs, services and a voice.
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· 429words · Minimalist IAS
Corporate growth and regional development against a community's right to shape its own future: ABC's plant is a real public good, planned without those who will bear its costs.
Stakeholders
- Who is affected: ABC and its shareholders; present and future employees; Vikaspuri's residents, panchayat, traders and farmers; incoming migrants; the Government offering a five-year tax holiday; the courts; the 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: Gandhi's trusteeship holds that wealth from trade and industry does not wholly belong to its maker; using CSR to manage protest turns that duty into a tactic.
- Governance gap: the Government ignored the residents' plea, pushing them to court and adding delay and mistrust.
- Sustainability: efficient technology is a gain, but housing, water and sanitation 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 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: job training and 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, preferring "the local area": let residents set 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.
Long-term safeguards
- Align incentives and build capacity: link the tax holiday to verified local jobs and published progress; fund skills institutes and civic infrastructure so growth outlasts the incentive; make early consultation a condition of future incentives.
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.
Prepared by Minimalist IAS to the answer standard of Shivam Singh (mentor, 7 years) · facts checked against official sources (how we verify) · updated 1 Oct 2026. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.
