SPECIAL/CSR

A skill development centre run by RP Sanjiv Goenka Group in Kolkata

income families and those who did not have access to quality maternal facilities. As many as 200 workers were trained to generate awareness and to increase demand for healthcare services. These workers went from house to house collecting real-time information on the health of mothers and children on tablets provided to them. Corrective action was taken without delay. The programme helped reduce neonatal mortality up to 32.7 per cent and infant mortality up to 26.5 per cent within three years.

Such philanthropic initiatives have a long history in India. But the idea was brought into a legal framework in 2014 when CSR was introduced as a statutory obligation under Section 135 of the Companies Act, 2013. Under this, every company with an annual net worth of over `500 crore, turnover of over `1,000 crore, or net profit of over `5 crore, must spend at least 2 per cent of its net profit on CSR. Latest data with the Ministry of Corporate Affairs (MCA) shows expenditure on CSR activities has increased from `10,066 crore in 2014-15 to `13,624 crore in 2017-18. During this time, the number of public sector undertakings (PSU)

and private sector firms also increased from 16,548 to 21,397.

These companies divert a major chunk of the CSR

funds towards human development. A 2019 study by the Indian Institute of Corporate Affairs (IICA), a government think tank that provides holistic advice on issues related to corporate affairs, shows 55 per cent of the CSR funds in the country are spent on human development and social welfare. As many as 104 companies are involved in activities related to human development. These include 30 PSUs and 74 private firms. However, the focus on economic development and environment sustainable development is relatively poor, the report states. The reason for this, say experts, is the nature of these sectors.

“Traditionally, sectors such as health and education have a clear blueprint and are easy to undertake. Moreover, these activities are easily quantifiable which gives companies ready numbers. But companies have not focused much on environmental activities,” says Pradip Narayanan, member, CSR Laws, Praxis, a Delhibased non-profit.

PHILANTHROPY FROM A DISTANCE

In the initial years of the CSR Act, MCA observed that companies would execute projects far from their area of operations. As per the Act, companies should choose local areas for CSR activities, but 73 per cent companies were found to be engaged in areas beyond their area of operations, states the IICA report that analysed data from 2014-15 to 2017-18. Maximum expenditure is in industrialised areas, while the least developed states received least funds. The phrase “local area preference” in the Act may have been interpreted as mandatory and not directory, the report states. Considering