What Is CSR?
According to company law, the cost of doing social responsibility for companies is called CSR or Corporate Social Responsibility. The companies who qualify for CSR are:
- Companies having a net worth of ₹500 crore or more.
- Companies having a turnover of ₹1,000 crore or more.
- Companies earning a net profit of more than ₹5 crore.
Big claims by our government that India is growing at an average rate of 7.2% and is one of the most development-oriented economies in the world is not backed by the figures presented by the government itself.
An ample fall in the spending over Corporate Social Responsibility (CSR) during 2016-17 shows that everything is not well in the corporate world. This reduction in CSR funding was huge throughout the nation.
The previous ‘UPA’ government reformed the company law and designed the ‘CSR’ fund. Accordingly, government and private sector companies are required to spend 2% of their net profit on philanthropic activities. It is obvious that if the business of companies is good and if they make a good profit, then their CSR funding will be even more expensive. Naturally, the trend of expenditure reduction is a sign of the delicate nature of the economy. However, these figures of ‘CSR’ funding are alarming and depict the real state of the economy.
In the year 2015-16, the companies across the country had spent ₹13,827.86 crore through CSR funding. Last year, this expenditure fell to ₹4,719 crore. In 2014-15, the NDA government came to power and the expenditure was ₹9,564.86 crore. That is, the CSR contribution which raised more than four thousand crores in the previous year finally came down by about nine thousand crores. It is believed that demonetisation, GST implementation and other policies of the government have caused this reduction.
In reply to a question from NCP MP Mrs Vandana Chavan, the Company’s Affairs Ministry recently gave these figures to the Rajya Sabha. When the NDA government came to power in May 2014, the economy was very strong and according to the CSR funding, there was a lot of work happening as regards CSR. But after that, it started dropping.
Maharashtra was on top of the ‘CSR’ expenditure. But the government and private companies seem to have started getting low funds. The CSR expenditure of ₹1,372.34 crore in the year 2014-15 has increased to ₹1,810.45 crore in the next year. But last year, it just hit ₹702.37 crore. The same picture can be seen in every state. Andhra Pradesh, Tamil Nadu, Karnataka, West Bengal, Odisha and Gujarat are among the major states where CSR activities were carried out to a greater extent, but now as per the figures released, each state is witnessing a falling trend.
This is an indication that industries are under-performing and earning lower returns, hence spending less on social causes. CSR expenditure is showing a falling trend whereas average growth rate is increasing – is this not conflicting? MCA figures on CSR are questioning the reliability of the growth rates published by the government.