Impact of CSR mandate on Indian Companies during Covid-19
Written By:- Akarsh Sharma
Impact of CSR mandate on Indian Companies
CSR is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR is a method through which a company achieves a balance of economic, environmental, and social imperatives while at the same time addressing the expectations of shareholders and stakeholders. Anything that is beneficial for society can be called CSR and such activity must be shown by the company on their website and the company should take approval from the board.
As per Section 135 of Companies (CSR) Rules 2014 and Schedule VII of Companies Act 2013, every company having a net worth of Rs 500 crores or more, or turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more during the immediately preceding financial year, must have a CSR committee and spend at least 2% of the average net profits earned during three immediate preceding financial years to CSR activities.
Since CSR was mandated six years ago, Indian companies have worked towards adapting to their new role as grant-makers. Today, with the impact of the COVID-19 pandemic and the lockdown on our public systems and the economy, their responsibility to all stakeholders appears starker than ever.
IMPACT OF COVID-19 ON CSR
On March 11, 2020, W.H.O marked covid-19 as a global pandemic. On 23rd March 2020, India took its first step to fight against covid-19 and imposed an all-nation lockdown. In the present era of COVID-19, the Government of India is inspiring companies to provide social support. According to March 23, 2020, Ministry of Corporate Affairs circular, all expenditures incurred on activities related to COVID-19 would be added as permissible avenues for CSR expenditure.
Funds may be spent for various activities related to COVID-19, under the following items of Schedule VII:
- Eradicating hunger
- promoting healthcare, including preventive healthcare
- Sanitation, including contribution to the Swachh Bharat Kosh set up by the Centre for promoting sanitation and making available safe drinking water
- Disaster management, including relief, rehabilitation and reconstruction activities
On 26 August’20, the Government amended the CSR norms to include research and development (R&D) spending on new vaccines, drugs, medical devices related to COVID-19.
The other amendment in norms was to allow all donations for Covid-related efforts to be eligible for a 100 per cent tax deduction. And companies who contribute over and above the minimum prescribed amount to later offset the excess against the CSR obligation arising in subsequent years if they so desire. These certain policies helped the corporate to move forward and perform their CSR duties to help the nation in fighting Covid-19.
The 2nd wave of coronavirus hit India in 2021 and suddenly there was a shortage of oxygen all over the nation. As Covid-19 cases rise at an unprecedented pace, India’s oxygen producers are struggling to meet medical oxygen demand at many hospitals across the country, particularly in Delhi.
To help out in such needy situations many corporates step forward to fulfil the scarcity of oxygen by donating as much as possible. Tata Group and Reliance Industries Limited are two of the biggest companies that have pledged to support the government’s effort to increase the production and supply of medical oxygen or liquid oxygen.
Tata group announced that it would be importing 24 cryogenic containers to transport liquid oxygen to help overcome its shortage, on the other hand, Reliance Industries Limited (RIL) has also committed to increasing the supply of liquid oxygen to over 700 metric tonnes per day to states like Maharashtra, Madhya Pradesh, and Gujarat. The company plans to increase liquid oxygen production capacity to 1,000 tonnes per day, added the PTI report.
Presently the whole nation is in a fight for survival and the corporates in India are performing their CSR duties by helping in each and every possible way. The amendment in CSR norms in 2020 has helped many companies to come forward in the war against the pandemic.
In conclusion, the COVID-19 pandemic has brought Corporate Social Responsibility to the forefront. Corporates, both large and small, headquartered in India or abroad, have risen to the challenge and augmented the government’s efforts by re-orienting their CSR strategies. It is hoped that the same zeal and mission-mode orientation carries over to activities beyond the pandemic.
Keywords: Impact of CSR, Impact of CSR mandate on Indian Companies.