172 companies indicates that these firms spent Rs 3,360 crore for CSR work in 2015-16 against the mandated Rs 2,660 crore on such activities
NEW DELHI (India CSR): Under the Companies Act, 2013, a certain class of profitable companies is required to spend at least 2 per cent of their three-year annual average net profit towards CSR works in a fiscal. The norm came into effect on April 1, 2014.
Nearly 400 companies together shelled out about Rs 5,857 crore towards corporate social responsibility (CSR) activities in two years, Parliament was informed today. Under the Companies Act, 2013, a certain class of profitable companies is required to spend at least 2 per cent of their three-year annual average net profit towards CSR works in a fiscal. The norm came into effect on April 1, 2014.
CSR Spending of Rs 3,360 crore in 2015-16
An assessment of CSR expenditure of 172 companies indicates that these firms spent Rs 3,360 crore in 2015-16 against the mandated Rs 2,660 crore on such activities, Minister of State for Corporate Affairs Arjun Ram Meghwal said in a written reply to the Rajya Sabha.
In 2014-15, 226 companies spent a total of Rs 2,497 crore, less than the mandated amount of Rs 3,499 crore, on CSR activities. In a separate reply, Meghwal said the ministry has not been informed of any malpractices by companies while implementing their CSR policies.
To facilitate effective implementation of CSR activities by the companies, the government has issued frequently asked questions and organised workshops.
CSR Law in India
CSR in India was done mandatory with a hope to bring about changes from the ground level with the help of the corporate world in association with the local administration. Unfortunately, it hasn’t turned out to be as expected due to procedural and policy inadequacies which have failed to set up a fool proof method of imparting CSR, which is being exploited by the companies. The CSR law needs to be amended to make it simple, monitorable and sustainable for the long term.
The mandatory CSR spending
As per section 135 of the Companies Act, 2013, CSR efforts will be equated with the money spent- which should be at least 2 percent of the net profit. However, companies are not very transparent in declaring their CSR income. Companies in the past have fudged figures to meet the mandatory CSR spending. Furthermore, companies that were spending more than 2 percent before the said law came into place, have started spending much less these days.
Must Read: Strengthening Ecosystem: The next big things for CSR in India – India CSR Network
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