industry bodies for their feedback and suggestions. The idea is to ensure that the funds are spent on substantial CSR activities,” Pilot said.
Stating that his first priority was to get the Companies Bill passed by Parliament, the minister said: "We can always make amendments in the law once it is passed. Of course, this will be done with the active participation and feedback of the corporate sector.”
The move to float an SPV for use of CSR funds takes its cue from similar mechanisms in countries like France, Mauritius and Indonesia, among others.
In Mauritius, for example, a company or a group of companies with CSR contribution above a threshold value can use an SPV for the implementation of its CSR initiatives provided it meets certain laid-down riders. As per the norms, the administrative costs of the SPV should not exceed 15% of the total expenditure on projects for a CSR fund of up to 20 million Mauritian rupees. Then the SPV has to work and report to a national CSR committee.
Based on the financial results posted by listed companies in 2010-11, a report by SMC Global Securities had said that India Inc would need to collectively shell out around R9,000 crore as around 1,230 companies had collectively posted profits of R4.38 lakh crore.
In FY12, state-owned oil companies, led by ONGC and Indian Oil Corporation, hired over 4,200 people and spent around Rs 385 crore on CSR initiatives, according to a statement from the oil ministry in October.
The move to float an SPV comes from the fact that there has been a mismatch between the CSR funds generated and used up every year. An analysis of CSR funds of leading PSUs shows this mismatch. Sample this: In the last three financial years – 2009-10, 2010-11 and 2011-12 – Coal India allocated Rs 860 crore towards CSR activities but used only Rs 230 crore. Similarly, ONGC allocated Rs 1,036 crore but used only around half (Rs 510 crore). NTPC allocated a total of Rs 135 crore on CSR activities but managed to use Rs 100 crore only.