CSR funds can be used to fight virus

TAPPING A POTENTIAL ₹30,000 CRORE IN FUNDING, INDIA INC CAN SPEND THEIR CSR BUDGET IN FUNDING THE CAMPAIGN AGAINST CORONAVIRUS

NEW DELHI: The government on Monday allowed companies to deploy their Corporate Social Responsibility (CSR) funds in the fight against the coronavirus (Covid-19) pandemic, tapping a potential ₹30,000 crore in funding.

“In view of the spread of novel #CoronaVirus in India, its declaration as pandemic by the WHO, and decision of Government of India to treat this as notified disaster, it is hereby clarified that spending of CSR funds for Covid-19 is eligible,” finance minister Nirmala Sitharaman said on Twitter.

Management teams at companies that haven’t used up their entire CSR budget over the past few years can now spend the remaining money in funding preventive healthcare, sanitation programmes and disaster management as part of the campaign against the coronavirus disease, a government official said, requesting anonymity.

According to an industry estimate, companies have spent about ₹50,000 crore on CSR since 2014-15 and around ₹30,000 crore remains unspent. On average, Indian companies spend ₹15,000 crore on CSR activities in a year.

In the past, several companies have told the government that they have accumulated CSR funds because they couldn’t find suitable projects to spend the mandatory amount on during a particular year.

Minister of state for finance and corporate affairs Anurag Singh Thakur told Lok Sabha on March 16 that a high-level committee on CSR has recommended the transfer of the unspent CSR amount to a separate, designated account. “Unspent amounts, and the interest earned thereon, (have to) be spent within a period of three to five years, failing which the same be transferred to a fund to be specified by the central government which may be used for innovative, high-impact projects related to activities..,” he said.

Government-approved CSR activities include eradicating hunger, poverty and malnutrition and promoting healthcare, education and gender equality. They also include activities related to environmental sustainability, protection of national heritage, art and culture, training to promote sports and contributing to the Prime Minister’s national relief fund and disaster management.

As per the law, companies with a net worth of ₹500 crore or more, or a turnover of ₹1,000 crore or more, or a net profit of ₹5 crore or more in the immediately preceding financial year are required to spend 2% of their average net profit of the preceding three years on CSR.

CSR activities are governed by the Section 135 of the Companies Act, 2013.