Friday, 2 September 2016

Companies May Have To Spend 30% Of CSR Funds For Clean India

Keen to accelerate Swachh Bharat Abhiyan, the Central Government is considering a proposal to ask private companies and PSUs to spend around 30% of CSR funds on cleanliness programs.  

The proposal is under consideration of a panel of Union ministers which is deliberating on ways to fast-track Prime Minister Narendra Modi's top priority schemes - Make in India, Jan Dhan Yojana, Swachh Bharat, Digital India and Skill India. The proposal is in line with the recommendation of Niti Aayog's panel of chief ministers headed by Andhra Pradesh CM Chandrababu Naidu.

The panel in its report has said, "A certain part of the CSR contributions by PSUs/Companies may be spent in the states where they are located." Niti Aayog's report had recommended several steps, stating "it is very comprehensive in its coverage and requires huge amounts of funds to cover all aspects of the mission."

As per the Niti Aayog report, the mission, launched on October 2, 2014, envisages an investment of nearly Rs 2.23 lakh crore over a five-year period for constructing household toilets, community and public toilets and scientific waste management. The government is also considering long-term, tax-free Swachh Bharat bonds to raise funds.

At CAP, we are of the view that CSR is meant to be voluntary. It cannot and should not be enforced or else it becomes a form of indirect taxation. Even, right now; the law only Mandates CSR Reporting, not its implementation. Companies should be encouraged to undertake CSR activities according to their own policy and in alignment with their business interest.

The government may succeed to some extent in persuading PSUs. However, it is doubtful whether they will be able to arm-twist private and public Ltd. companies.

Let's wait and watch.

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