CSR: Parl panel wants PSUs to focus on remote backward areas

A Parliamentary panel today suggested that the central public sector enterprises (CPSEs) should spend money under the CSR obligations on development of the remote backward areas of the country.

The committee is also of the view that as provided by the Companies Act 2013, it is an obligation of a company to be concerned with the well-being of its local populace and environment, the resources of which are being directly utilised by them.

"...the committee also holds the view that CPSEs should take into account the development of remote backward areas of the country," the panel, in its report presented in Parliament today, said.

These are areas where the pace of industrial development has been slow due to their geographic location, it added.

The Department-related Parliamentary Standing Committee on Industry, headed by K C Tyagi, reviewing the provisions of corporate social responsibility (CSR) under the Companies Act, 2013 recommended that NGOs through which CSR programmes are run should furnish their utilisation certificates on time.

"While neighbourhood community and local area with reference to company's work have first claim on CSR projects, Schedule VII should also provide for development by individual company or jointly with other companies, in backward areas like North-East, Andaman & Nicobar islands and Lakshadweep, which do not have much industrialisation and are in need of development," the panel said.

The committee suggested that the Department of Public Enterprises (DPE) should issue guidelines as to how can the CPSEs extend their CSR oversight to entire supply chain network to ensure that vendors comply with principles of CSR as per DPE guidelines.

"DPE should also allow CPSEs to join in the central and state government's schemes like Mid-day meals, Sarva Siksha Abhiyan as per Schedule VII," it recommended.

For this, the DPE should evolve a model arrangements framework between CPSEs and the nodal government agency, which should ensure timely release of utilisation certificates to the CPSEs so that it can reflect the CSR expenditure in its annual accounts, the panel suggested.

"Similarly, the company or NGO, through which CSR projects are to be implemented, too should furnish the utilisation certificate in time. It must be ensured that such NGOs and companies should actually use the funds in time," it said.

During its interactions with CPSEs, the committee said it needed greater clarity over the clarifications regarding CSR obligations of holding companies like Coal India considering that earning in form of dividend were not included while computing net income.

"There is confusion whether PSUs can set up professional/ skill development institutions as per Schedule VII in their respective area of usual business and core competence," it said.