CSR activities are down 64% in 2020-2021; private sector improves | Latest India News
New Delhi Statutory corporate social spending fell 64.24% in the 2020-21 pandemic year, official data shows, while contributions to corporate social responsibility fell to ₹8,828 crore compared to ₹24,689 crores spent in the previous fiscal year.
The number of companies engaged in CSR activities fell by around 93% on an annualized basis to 1,619 in 2020-21, from 22,531 a year ago, according to data from the Ministry of Corporate Affairs’ CSR Portal. from directors’ reports and forms filed by companies as of September 30, 2021.
Disruptions caused by the Covid-19 pandemic and difficulties in vetting organizations and projects to be funded are among the reasons for the decline in CSR spending, experts have said. The earmarked funds can be used once these obstacles have been removed.
Reliance Industries maintained its leadership position in social spending, with growth ₹Contribution of 922 crores in 2020-21 compared to ₹908.71 crores spent in the previous fiscal year. Tata Consultancy Services remained the second biggest spender with ₹674 crore compared to ₹602 crore earlier.
However, the state-owned oil and gas company lost its third position in 2019-20 with CSR spending of ₹582.07 crore, and slipped from the list of top 10 contributors in 2020-21.
It is mandatory in India for companies with a net worth of at least ₹500 crore, an income of ₹1,000 crore, a net profit of ₹5 crore, to spend a minimum of 2% of their average net profit recorded over the previous three fiscal years on wellness activities.
Combined SOE spending in 2020-21 was just 6% ( ₹561 crores) of the total ₹8,828 crores spent on CSR activities, while private companies contributed 94%. However, in the previous year, the combined contributions of public sector enterprises were ₹5,242 crores, or 21% of the total ₹24,689 crores spent, according to official data.
Since 2014-15, the combined CSR expenditure of companies is around ₹1.10 lakh crore. The CGSB and the Ministries of Corporate Affairs, Finance and Petroleum did not respond to emailed questions about the matter.
“It is possible that the figures will be revised later, as some companies may be late filing details of their CSR activities due to disruption caused by the Covid-19 pandemic,” said a government official, speaking on condition of anonymity. .
There could be several reasons for the drop in corporate social spending, experts said.
The drop in numbers may be due to the fact that most designated funds are parked in bank accounts for future use, according to Saguna Sodhi, partner, forensic and integrity services at consultancy firm EY.
Any unspent amount of the CSR budget can be transferred to a designated bank account within 30 days of the end of a fiscal year and can be used in the following three fiscal years.
The spread of Covid-19 in 2020-21 could be another reason, she said. “In the previous financial year, during the initial 6-7 month lockdown period, most CSR funds were redirected to the PM Covid relief fund as companies were unable to undertake planned activities on the ground,” Sodhi said. “However, when the unlocking started, it was gradual and happened in a gradual manner, which might not have been conducive to projects starting as planned.”
CSR compliances are heavy, which could have been another reason for the delay, Sodhi said.
“CSR spending according to the allocated budget is mandatory and not optional. However, with an increased focus on compliance regulations and board accountability, companies now have specialized committees to determine which projects best fit their philosophy and allocate the appropriate budgets to that,” he said. she declared. “A lot of energy is invested in setting up a third-party verification process before funding projects.”
Another disincentive that may have impacted the number of declining companies could be the January 2021 changes to CSR rules under which eligible implementing agencies were required to register with the government and obtain a CSR registration number before they can accept funds, she said.
“Many NGOs were de-listed during the 2019-20 and 2020-21 period and there was a decline in implementing partners available for funding,” she said.