The Good Samaritan

The social quotient of India Inc is on a high. Cumulative spending on corporate social responsibility (CSR) has shot past the ₹500-billion mark in four years since the legislative mandate was implemented. Under the Companies Act, 2013, a company is required to spend 2% of its average net profit of the preceding three years on CSR if it had in any of those years net worth of ₹5 billion or more, turnover of Rs 10 billion or more, or net profit of Rs 50 million or more.

According to a Crisil estimate, spending by listed companies rose 12% on-year in FY18 to around ₹100 billion– the first time it has reached this mark. The report states that, assuming the same rate of growth, spending by unlisted companies is estimated to be around #51 billion for the year, taking the total for the year to ₹151 billion. The cumulative spend over the four years stands at ₹341 billion for listed companies and ₹189 billion for unlisted ones, thus totalling around ₹530 billion.

As expected, education & skill development got investments from the most number of companies, followed by healthcare & sanitation. Around 74% of all companies used implementing agencies such as non-governmental and voluntary organisations for their projects. Interestingly, small companies also preferred implementing agencies. Of the ones in this bracket that spent 2% or more on CSR, 70% used such partners compared with 67% the previous fiscal.

In FY18, of the 4,832 companies listed on the Bombay Stock Exchange and the National Stock Exchange, 1,913 met the criteria for mandatory criteria. However, 341 companies said they were unable to spend because of various reasons such as delay in identifying projects or setting up the requisite inhouse expertise, while 163 companies said they were not required to spend either because they did not meet the criteria or were loss-making.