Advertisement

HindustanTimes Mon,29 Dec 2014

CSR spending may pump in Rs. 27, 000 cr a year

Manu P Toms, Hindustan Times  New Delhi, September 21, 2013
First Published: 00:39 IST(21/9/2013) | Last Updated: 02:37 IST(21/9/2013)

The new Companies Act, 2013, which proposes that 2% of profits earned by a certain class of companies must be spent on corporate social responsibility (CSR) activities,  would mean an estimated Rs. 27,000 crore will flow into grassroots development and social enterprise sectors every year, says a think-tank.

Advertisement

According to the Indian Institute of Corporate Affairs, of the 1.3 million companies in India, about 6,000-7,000 companies are covered under the new CSR rule as it is applicable only to companies that have a minimum net worth of Rs. 500 crore, turnover of Rs. 1,000 crore or net profit of Rs. 5 crore.

It is currently estimated that the average CSR spend currently is 1-1.25% of profits, while the Companies Act, 2013, prescribes 2%.  While the new Act does not make this kind of a CSR spending compulsory, it mandates reporting any failure in meeting this target, creating social pressure on companies.

While corporate affairs minister Sachin Pilot insists the new CSR rule is driven by the principles of self-regulation and self-disclosure, corporate leaders like Bajaj Group chairman Rahul Bajaj and Infosys vice-chairman Kris Gopalakrishnan have raised concerns over the government dictating terms on philanthropic initiatives of companies.

http://www.hindustantimes.com/Images/Popup/2013/9/21_09_13-pg-19-biz-a.jpg

On the other hand, many including Kotak Mahindra Bank managing director Uday Kotak welcome the new rule. “There is a very fundamental change in CSR. Making it part of the law is path breaking,” Kotak said at a Confederation of Indian Industry (CII) conference on the Companies Act, 2013, early this week.


Advertisement
more from Business

No violation of safety norm or unfair seat allotment: Air India

Air India on Saturday said its fight safety wing is looking into the issue of a daughter of a senior pilot resting in a bunk, meant only for use of flight crew members, during one of its flights to Newark from Mumbai recently.
markets
Advertisement
Most Popular
Advertisement
Advertisement
Copyright © 2014 HT Media Limited. All Rights Reserved