The Committee on Public Undertakings (CoPU) headed by former Himachal Pradesh Chief Minister and veteran BJP MP Shanta Kumar has urged the government to amend the Companies Act to define corporate social responsibility (CSR).
Addressing reporters along with BJP patriarch LK Advani, who is also a panel member, Kumar said the Corporate Affairs Ministry should draft the guiding principles for CSR funding to include poorer sections of the society in the growth process. He said the spirit of CSR should be in line with the Antyodaya philosophy.
After examining the pattern of expenditure, Kumar said the panel found that it had not always targeted the poorest of the poor, or the most backward of the country’s areas. “The committee, therefore, recommended that CSR should be clearly defined in the Act itself. The definition should cover the broader principles of CSR spending so as to ensure that allocations are spent for the specified activities targeting poor and backward areas,” the report, submitted in Parliament on Friday, said.
The report said the panel was concerned to note that the Corporate Affairs Ministry and the Department of Public Enterprises had not bothered to maintain data on the amount spent on CSR so far by Central Public Sector Undertakings as well as private companies.
“There are 21,429 companies having a net profit of above ₹5 crore, i.e. they cross the threshold limit for spending the requisite amount on CSR. Thus, it can very well be presumed that a huge amount of money under CSR would be available, which in the opinion of the Committee, if utilised properly, can contribute in bringing visible change to the lives of the poor in the country,” the report added.
Not quite ‘mandatory’The report said that although the word ‘shall’ has been used in Sub-section 5 of Section 135 for making CSR expenditure mandatory, the second proviso to this sub-section dilutes this position. “Committee strongly feels that the whole purpose of making the CSR spending mandatory is defeated by the second proviso as a company can get away easily by simply stating the reasons for not spending prescribed CSR allocations,” the report said.