India Inc. set to spend entire CSR budget on coronavirus; no space for other causes
BusinessToday.In June 9, 2020
India Inc. will use entire or most of its corporate social responsibility (CSR) kitty for the year on combating coronavirus pandemic, according to a research report by rating agency CRISIL. Indian corporates have already used their CSR funds to donate to the PM CARES Fund, other relief funds, distribution of food, masks, personal protective equipment (PPE) for healthcare workers, or relief material to the needy, CRISIL said in its CSR Yearbook.
The agency said that as companies are set to empty their CSR funds to support fight against COVID-19 pandemic, there is little or almost no scope for the other causes the companies have been supporting.
Maya Vengurlekar, chief operating officer at CRISIL Foundation says, "Interestingly, the 130 companies analysed by CRISIL accounted for nearly 80 per cent of the total CSR spend by all listed companies in fiscal 2019. Assuming other companies would have followed a similar path, India Inc has already allocated over 80 per cent of the annual CSR budget to address the pandemic. This could impact spending on other areas this fiscal."
Since March 15, 2020, 84 companies out of the 113 companies studied by CRISIL, contributed about Rs 7,537 crore that can be classified as CSR spend. Of this, 57 per cent was contributed to the PM CARES Fund and the balance spent on other relief funds, food or ration donation, masks, sanitisers and PPE kits - where a monetary value was attached. The PM-CARES Fund has been set up to provide relief to those affected by any kind of emergency or distress situation.
According to the agency, the remaining 29 companies either contributed to other funds (Rs 373 crore), and/or facilitated voluntary employee donations (Rs 84 crore) that cannot be classified as CSR spend, or donated solely in kind (food and masks), for which assigning a monetary value was difficult.
Region-wise, 36 companies in Maharashtra, worst COVID-19 affected state, account for 63 per cent of the total spent.
Meanwhile, private sector companies, public sector undertakings and foreign companies have contributed proportionately to their share in the sample, it added.
Earlier in March, Finance Minister Nirmala Sitharaman had announced that funds spent by the corporates to fight coronavirus will qualify as CSR activity.
Under the Companies Act, 2013, certain classes of profitable companies are required to spend 2 per cent of its average net profit of the preceding three years on CSR.