Corporate social responsibility (CSR) expenditure by India Inc towards eradication of hunger and poverty, and promotion of healthcare and sanitation took a back seat in 2016-17 as the total spend on the activity fell Rs 549 crore or 18.6 per cent from Rs 2,944 crore in 2015-16 to Rs 2,394 crore in 2016-17.
While the India Inc’s overall CSR expenditure for 2016-17 rose 7 per cent to Rs 9,034 crore, activities such as promotion of education, vocational skill development, environmental sustainability and slum development got precedence from Indian companies during the year.
According to the data sourced from PRIME Database, while 1,019 listed companies spent a total of Rs 9,034 crore towards CSR in FY17, according to the requirements of the Companies Act 2013, education and vocational skills emerged as the top activities. During 2016-17, aggregate spend by companies on the activity rose Rs 591 crore or 21 per cent from Rs 2,793 crore in FY16 to Rs 3,384 crore in FY17. It alone accounted for 37 per cent of the total CSR spend by India Inc.
While education and vocational skills saw the biggest increase in absolute numbers, in percentage terms, the spend towards benefits of armed forces veterans, war widows and their dependents witnessed the biggest increase and it almost trebled from Rs 24.5 crore in 2015-16 to Rs 73 crore in 2016-17.
The steep rise in spend towards armed forces veterans and dependents of martyrs comes in line with the government’s decision in November 2016 to more than double the compensation for widows and families of soldiers dying while fighting for the country.
The government’s decision came after several Indian soldiers lost their lives due to repeated ceasefire violations by Pakistan following India’s surgical strike across the Line of Control. The revision was the first since the one done by the Atal Bihari Vajpayee government in 1998.
Other areas that witnessed significant rise in CSR spend include community development, infrastructure, social welfare, sports and slum development. On the other hand, the contribution towards the Prime Minister’s National Relief Fund declined Rs 90 crore or 56 per cent from Rs 162 crore in FY16 to Rs 71 crore in FY17.
While industrialised states with large corporate presence such as Maharashtra, Gujarat, Karnataka and Tamil Nadu top the list of highest recipients of CSR expenditure by India Inc, Maharashtra witnessed the biggest increase of Rs 140 crore in the year as the amount received by the state jumped from Rs 537 crore in FY16 to Rs 678 crore in FY17.
The next two in the list are Daman & Diu and Odisha as the two witnessed an increase of Rs 101 crore and Rs 92 crore, respectively, over the amount received in 2015-16.
PRIME Database Managing Director Pranav Haldea said, “The average net profit of these 1,019 companies over the past 3 years was Rs 4.80 lakh crore, up from Rs 4.53 lakh crore in 2015-16. As per CSR requirements, amount required to be spent by such companies was Rs 9,669 crore.
While the companies decided to spend Rs 9,936 crore instead, the final actual CSR expenditure by these companies was Rs. 9,034 crore as against Rs 8,430 crore in 2015-16, an increase of 7 per cent.” CSR law, which came into force in April 2014, mandates companies subject to the provisions of the Act to invest 2 per cent of their net profit in CSR projects.
Companies with a net worth of Rs 500 crore and above or revenue of Rs 1,000 crore and above or a net profit of Rs 5 crore and above are required to spend 2 per cent of average net profits of the past 3 years.