30% of CSR spend to be made mandatory for Swachh Bharat

The proposal of making 30% of CSR spends on Swachh Bharat is likely to be announced by the Prime Minister Narendra Modi in May, 2016.

NEW DELHI: The government expects to garner close to Rs. 2 lakh crore of funds over the next three years from India Inc by making 30% of their spend on corporate social responsibility (CSR) mandatory in projects such as ‘Swachh Bharat’.

Cartoon on Sanitation in India
Cartoon on Sanitation in India

The proposal of making 30% of CSR spends on Swachh Bharat is likely to be announced by the Prime Minister Narendra Modi in May, when the ruling government celebrates its second anniversary, a senior official said.

“The government is evaluating lot of time-bound projects, which are being identified right now and for that it needs lot of funds. It (government) is eyeing to mandate 25-30 per cent of CSR spends by corporates spending on such projects,” a senior government official close to the development said.

Even the companies, which are already doing a lot of work through their CSR activities, would be asked to mandatorily take up certain projects, for this purpose. For example, a company doing CSR towards sewage or clean drinking water in a few cities would be made mandatory to do them in other cities too.

To encourage the states and various departments, the government is also planning to give away awards from time to time so that there are competitions between states and states and district to districts, the sources said.

As part of the Companies Act, 2013, companies have to spend at least two per cent of their net profit on CSR and Rs. 1000s of crores are spent every year by them. However, with the Centre focussing on a lot of projects such as ‘Digital India’, ‘Make in India’, there needs lot more funds towards its flagship programme – Swachh Bharat Mission.

The Centre has already raised over Rs. 2,500 crore from the Swachh Bharat Cess as against a target of Rs. 3,000 crore. It plans to raise Rs. 10,000 crore from the cess in the next financial year.

The cess, which was introduced in November last year, is imposed at 0.5% on all taxable services to finance and promote initiatives under the Swachh Bharat Mission.

“It is imaginable how much rupees would be spent on such projects over the next few years by making 30% CSR spent on certain projects. Clearly, the Prime Minister has some vision and if successful, it will be a big political manifesto on his achievements for the next general elections in 2019,” said another government official.

However, one has to wait for the Prime Minister’s announcement to see whether it (30% CSR on Swachh Bharat) is made mandatory or not.

Meanwhile, Minister of State of Finance Jayant Sinha had recently said that total donations received including interest, for Swachh Bharat Kosh is Rs. 369.74 crore. Of this, Rs. 359.2 crore has been released for construction of toilets.

“The fund utilised under Swachh Bharat Mission (Gramin) since October 2, 2014 is Rs. 6,411.05 crore including Rs. 185.22 crore spent on print and electronic media,” he had said in response to a question in the Lok Sabha last month. (This article was published on March 27, 2016 in Business Line) 

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