Economic downturn due to the COVID-19 pandemic has impacted corporate social responsibility (CSR), evidenced by businesses’ charity spend for FY20 dipping by 50 percent of FY19 numbers, data showed.
CSR for FY20 was a little over Rs 7,800 crore against Rs 18,655 crore in FY19, Mint reported. This spend usually addresses societal concerns such as education, health, hunger, malnutrition and poverty.
As many as 248 entities, including large corporations in the auto, food and tech space spent well below the amount, data from the Corporate Affairs Ministry showed; while 98 percent of companies in the pharma, insurance and cement space contributed nothing towards CSR.
Further, the overall share of public sector companies’ contribution towards CSR dropped to 6 percent in FY20, compared to 20 percent in FY19.
Among segments for which funding was severely affected include health, where livelihood, especially for the differently abled, slumped by 50 percent to Rs 3,582 crore.
The report noted that data may be incomplete as the required timeline to file data for CSR is October – this was extended by the Centre till January, due to the pandemic.
The ministry had in fact in January 2021 encouraged corporates to boost CSR spend despite the pandemic by amending CSR rules and allowing credit for extra spending this year to be set off against spending obligation in future years.
Corporate have however been “conservative” in spending since CSR funds are sourced from overall liquidity which has been impacted due to the pandemic, Pavan Kumar Vijay, founder of consulting firm Corporate Professionals Group told the paper. He however noted that the new amendments require designated provision for CSR funds separate from overall liquidity.
Taking the carrot and stick approach, the ministry has also imposed fines of at least Rs 1 crore on companies that default on their CSR, while defaulting officers could be fined at least Rs 2 lakh each. Names of top spenders and defaulters will also be made public.
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