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NEW DELHI: Spending by Indian companies on corporate social responsibility (CSR) activities can grow more than four times to USD 2.5 billion (over Rs 15,000 crore) a year if all companies spend the funds as per the norms.
The total spending on CSR initiatives stood at USD 600 million in the 2012-13 fiscal, while almost half was accounted for by top 10 entities including RIL, Coal India, Tata Steel and SBI.
These funds were spent by the companies on various social initiatives of the government and NGOs.
“If all eligible companies spend their mandated budget this year, CSR spend is estimated to grow about four times to USD 2.5 billion and technology companies will likely contribute about 20 percent or more of this,” according to a report by consultancy firm BCG and Nasscom Foundation.
As per the new regulations under the Companies Act, 2013, the government has mandated a minimum CSR spend of 2 percent of the company’s profits, for all organisations above a certain size of revenues and profit.
Analysis of CSR activities of top 100 companies shows that the mode of giving has primarily been through NGOs and other social organisations as around 90 percent companies are channelling their funds through these organisations.
“While majority of companies have established in-house foundations to engage in social activities, around 10 percent of the organisations choose to design and execute activities directly through them,” the report said.
Besides providing monetary assistance, companies are now also beginning to show greater degree of involvement in social initiatives like volunteering and providing expertise on best practices to NGOs.
A sector-wise analysis shows education and healthcare have received disproportionate attention with around 80 percent of the companies supporting these two sectors.
Many companies are focusing on providing access to quality primary education, supporting mid-day meals at schools as well as health check-ups or blood donation camps. Other focus areas include skills development, women’s empowerment and environment sustainability.
The CSR norms came into effect from April 1 last year through the Companies Act, 2013, which is being implemented by the Corporate Affairs Ministry.
As per the norms, a certain class of profitable companies are required to shell out at least 2 percent of their three- year average annual net profit on CSR activities.
Going by estimates, about Rs 14,000 crore is expected to be spent towards CSR activities by companies in the current fiscal.