NEW DELHI (India CSR): Corporate India had, as part of its CSR, spent as much as Rs. 6,947 crore towards healthcare activities, including Covid-19 related ones, during 2020-21, the Lok Sabha was informed on Monday.
This is out of the cumulative Corporate Social Responsibility (CSR) spend of Rs. 24,865 crore for 2020-21, Union Finance and Corporate Affairs Minister Nirmala Sitharaman said in a written reply to a Lok Sabha question.
She also said that the Corporate Affairs Ministry (MCA) does not specifically maintain details of CSR funds spent by companies for Covid-19 separately.
It maybe recalled that MCA had through various circulars issued in 2021 clarified that spending of CSR funds for carrying out awareness campaigns/programs or public outreach campaigns on Covid-19 vaccination program, setting up makeshift hospitals and temporary Covid-19 care facilities , creating healthcare infrastructure for Covid- 19 care and establishment of medical oxygen generation and storage plants and manufacturing and supply of oxygen concentrators /ventilators/cylinders are all eligible CSR activities under company law.
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Around 60 per cent of the total CSR funds spent by companies in the last seven financial years were in the areas of education, healthcare and rural development-related activities, according to the government. In a written reply to the Lok Sabha, the corporate affairs ministry also informed that during the given period, around 33 per cent of the total CSR amount spent by companies were in Maharashtra, Karnataka, Gujarat, Andhra Pradesh and Tamil Nadu.
Under the Companies Act, 2013, a certain class of profitable companies are required to shell out at least two per cent of their three-year annual average net profit towards CSR (Corporate Social Responsibility) activities in a particular fiscal.
CSR is a board-driven process and the board of a company is empowered to plan, decide, execute and monitor CSR activities of the company based on the recommendation of its CSR Committee. Minister of State for Corporate Affairs Rao Inderjit Singh said in the written reply that the government does not issue any specific direction to the companies to spend in any particular geographical area or activity.
Meanwhile, replying to another Parliament question on whether the Government has come across any cases of companies not abiding by CSR provisions, Sitharaman said in a written reply that so far sanction for prosecution has been accorded in 336 cases. Of these 155 applications for compounding have been made and 105 cases have been compounded.
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Earlier, CSR related defaults were compoundable offences. Now, the non compliance of CSR provisions has been made a civil wrong with effect from January 22, 2021.
Sitharaman highlighted that CSR is a board driven process, and the board of the company is empowered to plan, decide, execute and monitor the CSR activities of the company based on the recommendations of its CSR committee.
The CSR architecture is disclosure based and CSR mandated companies are required to file details of CSR activities annually in MCA21 registry. The government monitors the compliance of CSR provisions through the disclosures made by the companies in MCA21 Portal.
“Whenever any violation of CSR provisions is reported, action against such non compliant company is initiated as per provisions of the Companies Act after due examination of records and following due process of law”, Sitharaman said.
“An analysis of CSR data during the period 2014-15 to 2020-21, reveals that around 33 per cent of the total CSR spent by the companies is in the states of Maharashtra, Karnataka, Gujarat, Andhra Pradesh and Tamil Nadu.
Similarly, around 60 per cent of the total CSR spent by the companies is in the areas of education, healthcare and rural development-related activities,” he said.
In a separate written reply, Corporate Affairs Minister Nirmala Sitharaman said all CSR eligible companies have spent a cumulative CSR amount of Rs 24,865.46 crore in FY 2020-21. Out of the total amount, Rs 6,946.75 crore was spent on ‘healthcare-related activities’, including activities related to COVID-19.
Meanwhile, a total of 1,12,509 companies have been struck off from official records in a little over three years by the corporate affairs ministry, according to another written reply. These companies have been struck off under Section 248 (1) of the Companies Act during the period from April 1, 2019, to July 12, 2022.
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This section allows Registrars of Companies (RoC) to strike off companies. Singh said the government has undertaken a special drive for identification and striking off shell companies. However, there is no definition of the term ‘shell company’ in the Companies Act, 2013.
“It normally refers to a company without active business operation or significant assets, which in some cases are used for illegal purposes, such as tax evasion, money laundering, obscuring ownership, benami properties etc,” the minister said. Out of the total 1,12,509 companies, the maximum number was in Delhi at 19,464. It is followed by Maharashtra (16,023 companies), Uttar Pradesh (12,823), West Bengal (11,044) and Tamil Nadu (6,989), among other states.
