OPINION: Coronavirus and Corporate Social Responsibility in India

Team India Sentinels Wednesday 1st of April 2020 03:16 PM

By Harshit Kumar

New Delhi: The expenditure incurred by companies to deal with the coronavirus will be considered as part of their social corporate responsibility (CSR). While this decision shows the alertness of the government, it raises many questions. The risk of coronavirus is increasing across the country. It is the duty of government and social institutions to aware the public and cooperates in resolving their problems. The number of people infected with it has reached 500. In view of this situation, the entire country has been locked down.

Under the provisions of the Companies Act, companies are required to spend at least two percent of their three-year annual net profit under Corporate Social Responsibility in a financial year. Recently, the Ministry of Corporate Affairs issued a notification saying that the expenses of companies being used to deal with the coronavirus are eligible for CSR. 

The Ministry has the responsibility of implementing the Companies Act. Corporate Affairs Minister Nirmala Sitharaman said that in view of the increasing threat of Coronavirus in the country, the Government of India has decided to declare it a "notified disaster". The World Health Organization has declared it to be a "pandemic", so it is clarified that the expenditure of CSR funds on companies would be considered as CSR activity.

Now the question arises as to how the company should incorporate Coronavirus in its CSR program at the end of this financial year. Will the government also extend the financial year deadline? If you see, recently the Company Amendment Bill, 2019 has been passed by the Lok Sabha.

According to this, if a company will not spend the amount of Corporate Social Responsibility Fund set by it in a certain period, then that amount should be transfer to a special account (eg Clean Gaga Fund, Prime Minister's National Relief Fund) as prescribed by the government. Will the government also extend the deadline as this corona stands as a worldwide crisis?

Responsibility of the companies is being decided, but who will be the medium for the expenses that the company will spend in this battle of coronavirus. The question is whether the companies will be engaged in this campaign in association with the country's NGOs. If the corporate houses are dependent on the NGO, then who will ensure their accountability? No format related to the work of NGOs has been decided yet.

For the government to get out of the crisis of this pandemic, while the decision related to CSR of companies is praiseworthy, its format and monitoring related topic is visible on the background. The government should also ensure the expertise of the social organization and the format for CSR related topics on its work. Because the work of companies is possible through NGOs only. Presently, in the context of India, most of the NGOs have not met the expectations. India has the second highest number of NGOs, yet public interest and welfare are not ensured.

According to one data, an amount of about 1000 crore rupees is given to NGOs every year, but out of this, no account is given nor available for the amount spent, where it was spent and what happened.

After liberalization, there are about 33 lakh NGOs in India, out of which only ten per cent have reported their income expenditure. Due to this, transparency of the functions and income expenditure of NGOs is also under doubt. It is also time for the government to fix the accountability of social institutions in this corona epidemic with caution.

At the same time, the government can also open its relief fund for CSR related program. Under the Jan Dhan Yojana, by using open bank accounts, the government and corporate can succeed in benefiting the immediate public. The government needs to spend CSR money with caution and monitor its outcome.

(The author is an independent journalist and a social sector expert. The views and opinions in this article are personal.)

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