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Contribution of CSR in making New India

A powerful webinar organized by Brand India where Ashish Sachdeva, Founder President, Green Dream Foundation shared his views on Atamnirbhar bharat and contribution of CSR in making New India. Mr. Sandeep Simon Behera, Director Branding & Promotion Karunya Deemed to be University was the moderator of the discussion.

Mr. Ashish Sachdeva said, “Compliance to requirements of Section 135 of The Companies Act 2013 by India Inc. has seen a significant increase over the last five years with regards to Corporate Social Responsibility (CSR) policy, committee, annual disclosure on CSR, to name a few. 76 per cent companies have spent 2 per cent or more during the current year, which is a striking 100 per cent increase over the last five years. The cumulative expenditure by N100 companies from 2014-15 to 2018-19 is INR35077 crore.”

In the CSR policy, 12 per cent companies have gone ahead and aligned their CSR activities to ‘Global Goals for Good – SDGs’. One in every three company has already aligned their annual disclosure on CSR to SDGs. Annually, India Inc. spends approximately 60 per cent of its CSR budget on health and education.

The emergence of global crisis due to the novel coronavirus has led many corporate minds to ponder and step-in playing their part to be socially responsible to meet the need of the hour. In India, to encourage corporates towards fulfilling their social responsibility during the pandemic (as declared by the World Health Organisation) and as an endeavour to minimise its impact on public health, certain amends were made to the existing Companies Act, 2013 by the Legislators.

The Ministry of Corporate Affairs (“MCA”) issued its first Notification in light of the novel coronavirus disease, also referred to as COVID-19, on March 23, 2020. This Notification specified the decision of the Government of India to treat COVID-19 as a notified disaster and included spending of funds towards the virus as an eligible CSR activity by automatically deeming such expenditure to be treated under item (i) and (xii) of Schedule VII of the Companies Act, 2013 relating to promotion of healthcare, sanitation and disaster management. At this point in time, the MCA had only clarified the inclusion of activities eligible for CSR spends and no emphasis was made on mode of divergence of funds towards such activities.

Many experts were boggled whether a centralised approach or a decentralised approach should be considered by the Government as a mode for accounting expenditure under CSR activities. Thereafter, on March 28, 2020, the MCA issued a second Notification, through an office memorandum, in relation to expenditure towards CSR whereby the MCA issued a clarification under item (viii) of Schedule VII of the Companies Act, 2013 which enumerates that contribution made to any fund set up by the Central Government for socio-economic development and relief qualifies as a CSR expenditure. This (second) Notification clarified that the Government of India had set up the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (“PM CARES Fund”) with the objective of dealing with emergency or distress situations in light of the COVID-19 pandemic.

Pursuant to the office memorandum issued by MCA on March 28, 2020, many stakeholders sought clarification from the MCA on the eligibility of CSR expenditure related to COVID-19, since this Notification only included PM CARES Fund as a mode of routing CSR spends towards public health and sanitation abridging the pandemic. To elucidate the confusion amongst stakeholders pertaining to the Circular, MCA, thereafter, by way of a general circular on April 10, 2020, provided clarification in relation to a certain set of frequently asked questions on certain permissible and non-permissible corporate social responsibility activities amidst COVID-19.

Partnerships with NGOs working on the ground is the way to go. The number of companies having CSR Foundations’ have gone up from the base year (6 in 2014-15 to 18 in 2018-19). Against 21 per cent companies that implemented their CSR projects directly or exclusively through their own foundations in 2014-15, only seven per cent have reported to have chosen this mode of implementation during 2018-19, indicating an increased partnership with implementing agencies. The trend of increasing partnership is on a welcoming trend and a clear sign of recognising the strength of collaboration and partnerships, advancing SDG Goal 17- ‘Partnerships for the Goals’.

 

 

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