CSR spend below target

BASANT KUMAR MOHANTY

New Delhi, Nov. 11: Companies prefer to spend on education the most as part of their corporate social responsibility (CSR) but only one in four meet the desired level of investing in social causes, a study has found.   The analysis, conducted by professional services firm Deloitte India, suggests that 27 per cent of the 91 top companies studied spent at least 2 per cent of their net profit on CSR-related expenses in 2011-12.   Some 37 per cent of the companies spent between 1 and 2 per cent. The remaining 36 per cent spent less than 1 per cent, according to the Annual Status of Higher Education of States and Union Territories in India, 2013, a report brought out by the human resources development ministry and industry body CII.   Setting aside a part of their profits for social causes was not mandatory for India Inc., but the recently passed Companies Act, 2013, says business houses have to spend at least 2 per cent of their average net profit on CSR-related support .   “The CSR has remained less than 2 per cent for most companies because spending on CSR has been voluntary all along. Companies have been spending on social causes as per their mission and vision of the promoters,” said Rohin Kapoor, senior manager, tax, at Deloitte.   The new law, passed in the last session of Parliament, has already got the President’s assent. Now the rules, being drafted by the ministry of corporate affairs, have to be notified.   While the study found that companies invest in multiple social service causes, education stood out as the most preferred sector. Some 79 per cent of the companies studied were found to have invested in education, followed by 73 per cent in environment and 69 per cent in health.   The report does not give a break-up of sector-wise investment.   Kapoor quoted corporate ministry estimates to say that potential investment in CSR was expected to be between Rs 15,000 crore and Rs 18,000 crore annually from next year with the participation of 8,000 to 9,000 eligible companies. A major chunk of this investment is likely to be on education, particularly higher education, he added.   Sobha Mishra, education officer at industry chamber Ficci, said CSR-related investment had remained low mainly because growth has been limited to mostly companies in the service sector, which does not depend much on the local population.   On the other hand, infrastructure companies, which require large tracts of land, have to depend on local people for day-to-day functioning.   “The Tatas, Birlas and other such companies have done a lot on CSR. But the companies which came up in the last two decades, mostly in the service sector, do not depend much on local people,” Mishra explained. “These are export-oriented companies and they do not spend that much on CSR.” Mishra agreed with Kapoor, the Deloitte manager, on the possibility of education getting the maximum share of CRS funds, saying the sector was at the centre of economic planning.   Shalini Singh, who heads the higher education cell at industry body CII, said 60 per cent of Indians were young, but the potential demographic dividends could turn into a disaster if the youths were not educated and trained.   “I think the CSR spending on education is certainly going to increase,” she said.