With the passing of Companies Bill, 2013, the government is set to make stringent norms for Central Public Sector Enterprises (CPSEs) to implement the corporate social responsibility (CSR) projects. The corporate affairs ministry is working out the modalities with the department of public enterprises as for several years the profit-making maharatna and navratna CPSEs have not been fully utilising the CSR corpus.
Sources said the government is also exploring options of levying financial penalty on those profit-making CPSEs which do not utilise their CSR corpus continuously for two or three years. Also, if the CSR funds remain under utilised, the leftover amount will go to a central corpus fund which will be used at the discretion of an apex board on CSR which may be constituted soon.
"If the private sector companies are being mandated to spend on CSR and report reasons why they could not spend, the public sector companies should also be up to the mark. I will study the spending patterns of PSUs and see what more can be done," corporate affairs minister Sachin Pilot told FE.
As part of the multi-step strategy, first the top earning CPSEs like Coal India (CIL), Indian Oil Corporation (IOC), ONGC and SAIL, among others, will have to mandatorily spend a minimum of 2% of their average net profit on CSR. So far, the CPSEs generating profit in excess of R500 crore were authorised to spend a minimum of 0.5% of profits on CSR.
This was revised upwardly to 1% in December last year. Now, it will be revised again to 2% to align with Clause 135 on CSR outlined in the new Companies Bill, 2013, which will soon be called Companies Act of 2013.
CPSEs, whose net profit is less than R100 crore, will also need to spend a minimum of 2% on CSR as opposed to 3-5% before. Confirming this, OP Rawat, secretary, department of public enterprise, said: "When the Bill is enacted, the minimum spend for all PSUs will also need to be 2% for sure."
Under utilisation of CSR funds by the CPSEs is not a new thing. During