More businesses are spending on Corporate Social Responsibility (CSR) above their mandated level, even as those low spending have come down sharply, shows official data for FY11, showing default by the government. This indicates a sharp change in trend in corporate charities after penal provisions were introduced for. Relaxed norms for further expenditure on CSR.
The trend of businesses spending above their mandated level of 2% of net profit comes after the Ministry of Corporate Affairs gave credit for additional CSR expenditure, which companies are free to adjust against their future spending obligation.
According to official data from the Ministry of Corporate Affairs, 9,374 companies spent more than the prescribed amount on CSR in FY2011, which is 35% higher than those who spent more a year ago. Also, the number of companies that have not spent a penny on charity declined to 2,926 in FY2011, a decrease of more than 71% from the 10,247 companies that loosened their purse strings for CSR a year earlier. did not, as the data shows.
FY 2011 has seen an improvement in CSR spending compliance across all parameters. The data shows that businesses that have spent compulsorily have seen an improvement of 76% in FY11 to 1,416, while the number of companies spending less than the prescribed amount has fallen 30% to 3,290.
In FY21, more than 17,000 businesses bought . spent close to 25,000 crore in CSR, almost the same amount that over 22,700 companies had spent a year ago.
The sharp improvement in CSR spending coincides with a major reform in the legal framework that introduced more accountability along with penal provision and greater flexibility in annual spending in January 2021.
The government introduced a fine of at least One crore for the defaulting company and at least Two lakh for each defaulting officer with effect from last January following amendments to the Companies Act, in 2020 replacing a rigorous imprisonment provision that was never implemented. In addition, extensive changes were made to the CSR rules. This includes impact assessment of large CSR projects and greater relaxation in utilization of CSR funds in the spirit of ease of doing business.
It allowed companies to spend more than the mandated 2% of their net profit on CSR in any year and the additional amount spent can be set off against CSR spending liability in future years, subject to riders Is. The aim was to enable businesses to meet the needs of the community in any given year. This flexibility is available forever.
The data also revealed that the large state economies of Maharashtra, Gujarat, Karnataka, Tamil Nadu and Delhi received a major share of total CSR spending by companies. About 21% of the total CSR expenditure incurred in FY 2011 was done by state-run companies, while the rest was done by private sector companies. Major CSR spenders in the year are Reliance Industries Limited, Tata Consultancy Services, Tata Sons Pvt. Ltd., HDFC Bank Ltd., ONGC Ltd., Indian Oil Corp Ltd. and NTPC Ltd. showed the data.
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