NEW DELHI: Financial Express reported that India Inc wants the government to not restrict or tie social welfare spending to the mandatory provision of Corporate Social Responsibility (CSR) as mentioned in the new Companies Act, 2013.
Sharing the results of a survey conducted among 200 firms, the Confederation of Indian Industries (CII) on Tuesday said companies will face difficulty in spending 2% of their profits towards CSR activities if areas and methods of this expenditure is restricted.
In fact, CII survey bats for inclusion of more events and areas that should also qualify as CSR spend under the new law. These include strengthening or creation of new institutions, research, debate and on ground action among others as some of the additional measures that should be added in the existing list of items that qualify as CSR spends for India Inc under the new law.
As per the new law, activities that would fall under CSR net includes reducing child mortality and improving maternal health, combating human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other diseases, ensuring environmental sustainability, employment enhancing vocational skills and social business projects.
The Business Responsibility India Survey 2013 of the CII found that about 75% of the 200 companies surveyed have already incorporated business responsibility (BR) into purchasing policy or supplier code of conduct.
It said that about 25% of the companies are spending at least 2% of PAT on CSR activities. As per the new law, certain class of companies are required to shell out at least 2% of their three-year annual average profit towards social welfare activities from among an exhaustive list of activities. However, the corporate affairs ministry has invited suggestions and comments to the draft rule various provisions of the new law including those related to CSR where companies are free to recommend additional areas that should qualify for CSR spends.
On making it mandatory for the companies to spend on CSR activities, it said that it was too early to tell whether making sustainability a core aspect of businesses would happen through mandatory regulatory frameworks or voluntary efforts. Perhaps, a middle path is the most pragmatic and effective solution, it suggested.