Non-utilisation of CSR fund by PSUs unhealthy trend: Par panel
Dec 10 2013 , New Delhi
The observation of the Parliamentary Standing Committee on Industry comes at a time when the new companies law require certain class of private sector firms to spend at least two per cent of their three-year annual net profit towards CSR (Corporate Social Responsibility) activities.
"The committee regrets to note that some of the largest CPSEs (Central Public Sector Enterprises) in India are not utilising the funds earmarked for CSR activities.
"This can be viewed as an unhealthy trend having a direct bearing on the committment of the CPSEs towards India's social and environmental well being," it said in the report tabled in Parliament today.
According to the panel headed by Rajya Sabha member K C Tyagi, it is "even more disheartening" to note that the situation exists despite five per cent weightage being accorded to CPSEs for CSR activities.
CSR spend is part of the Memorandum of Understanding (MoU) entered by public sector companies with their respective parent ministries.
"Therefore, the Committee observes that the Department of Public Enterprises (DPE) has to take cognisance of this aspect and keep a tab in the future efforts of these CPSEs to improve their performance in this area (CSR)," the report said.
In its response to the panel's observations, DPE said it has been repeatedly exhorting public sector enterprises to spend the budget earmarked for CSR and sustainability activities.
Under the new guidelines on CSR expenditure of CPSEs, the unutilised budget for such activities planned for a financial year would not lapse and instead be carried forward to the next year.
In case, the earmarked amount remains unspent for two years, the same would be transferred to a sustainability fund -- to be created separately for CSR and sustainability activities, as per the guidelines.