Of the total ₹1.25 lakh crore spent on CSR in the last seven years, only 4 to 5% funds have gone to the PM Cares Fund and that too during the last two years amid COVID-19, Minister of State for Corporate Affairs Rao Inderjit Singh told the Rajya Sabha on April 5.
Replying to supplementaries during Question Hour, the Minister also informed the members that there was an attempt initially to include Chief Minister’s Relief fund for spending CSR funds but it was disallowed by the Government of India.
“Out of the ₹1.25 lakh crore that have been spent on CSR over the last seven years, not more than 4 to 5% has gone to the PM Cares fund. Most of that money has gone during Covid in two years,” Mr. Singh said.
He said prior to that, companies by themselves have been able to spend on all those activities that have been enumerated under the CSR pattern under Section 135 of Companies Act.
“There were attempts to make CSR funds go to the Chief Minister’s Fund, but it was not accepted by the Government of India. Because then, in whichever State the Chief Minister is then the funds from these companies will only go to the direction given by the Chief Minister. We don’t want to have that,” Mr. Singh said.
“The basic idea of spending CSR is to do the best you can for the public good. And it cannot necessarily be that only one person can think about and not the Chief Minister alone,” he said responding to a query by Prasanna Acharya (BJD) on whether the Chief Minister’s fund would be included in CSR spending.
Mr. Singh said it is a broad-based activity that the Board undertakes and we give general guidelines and the Board implements it. It is an activity pan-India, no matter where the company comes from, he said.
The Minister also said that Section 135 of the Companies Act provides the framework for the CSR spending and the first proviso to this is that where the company is established, it should first endeavour to spend CSR funds.
“But, this is not mandatory, it is directory,” he said.
“The broad principle adopted by the Government of India is for companies to not just spend at the place where it exists but also in other areas across the country,” he said.
To a suggestion to make CSR funds spending mandatory for improving the backward districts of the country, the Minister said, “It is stated that it is not mandatory.”
“What happens is that generally companies tend to spend money where they are located. The main beneficiaries thereafter are States like Maharashtra, Gujarat, Tamil Nadu, Andhra Pradesh, Delhi and areas in the north-east like Nagaland, where there is very little CSR spending,” he said. In this regard he said in the last seven years since CSR funds have been invoked, Nagaland has only been able to get ₹8 crore out of 1.2 lakh crore spent under CSR by various companies.
Mr. Singh also said that there is some sort of guideline for public sector undertakings that they should look into aspirational and backward districts.
“That kind of thing is already under anvil and has been passed and 60 percent funds of PSUs are spent in so-called aspirational districts,” he said.
To a query by Birendra Prasad Baishya (AGP) on whether CSR funds can be directed to be spent in the north east to help ensure its speedy development, the Minister said the idea of the Government of India is that it should be a broad-based activity and the responsibility of spending CSR funds lies with the Board of the companies.
“We are trying to ensure that the company through suggestions that it should be made to spend not only in the area of its operation but as broadly as possible throughout the country. That is what is being done.
“We unfortunately cannot direct any company to say that they should spend in the Northeast. It is not directory,” he said.
In her written reply to the question, Finance Minister Nirmala Sitharaman said, “Under the Act, CSR is a board-driven process and the board of the company is empowered to plan, decide, execute and monitor CSR activities based on the recommendations of its CSR committee. The Government does not issue any directions to the companies to spend in particular geographical area or activity.”
She said on the basis of filings made by the companies in the MCA 21 registry, “companies have spent an amount of ₹507.47 crores in 84 aspirational districts as identified by NITI Aayog in FY 2020-21 (data up to 31.12.2021) as against ₹331.91 crores in 82 aspirational districts in FY 2019-20.”
