Over 1,500 listed companies spent Rs 8,897 crore towards social welfare activities, about 90% of the budgeted amount during FY17, a Confederation of Indian Industry (CII) survey revealed.
According to an analysis by CII, a total of 1,522 BSE-listed companies spent Rs 8,897 crore in 2016-17 out of a total of Rs 9,680 crore, which they were required to spend on social welfare as per the law.
Under the Companies Act, 2013, a company with a turnover of over Rs 1,000 crore or a net profit of Rs 5 crore is required to spend at least 2% of its profits towards the corporate social responsibility (CSR) activities. In case of non-compliance, the firms are required to explain to the Ministry of Corporate Affairs (MCA) and the shareholders.
As part of CSR-related activities, BSE-listed companies spent the maximum on sports development, followed by heritage, gender equality and environment, according to the survey. There is an increase of about 10% in the CSR spend in FY17 as compared to Rs 8,185 crore spent in FY16. These companies spent Rs 6,442 crore in 2014-15.
Interestingly, the latest figures show a drop in the contribution towards PM relief fund. Only 45 companies contributed Rs 23 crore to the PM Relief Fund in 2016-17 as compared to Rs 80 crore in the previous fiscal year. “This is a positive indication towards the effort made by the companies to introspect their nature of spends and comply with the CSR registration, ” CII director general Charanjit Banerjee said.
While the listed companies have managed to improve their CSR compliance, experts feel that there is a need to do a qualitative analysis of the CSR spending.
“It is important to do a qualitative analysis of the CSR spend to find out how effectively the money is being spent. The companies should have a CSR policy, a charter specifying the focus areas for the welfare activities,” said Risham Garg, associate professor at the National Law College.
Experts also feel that the CSR work done by the companies should be inspected by the government. There are fears that the money meant for the CSR might be getting routed through shell companies for some other purpose. The MCA has also come across an increasing number of non-compliance with CSR requirement. Recently, the government set up a 12-member panel to review the enforcement of CSR provisions.