A committee set up by the ministry of
corporate affairs (MCA) has recommended that smaller companies get greater
operational flexibility for meeting their corporate social responsibility (CSR)
obligations.
The committee has also suggested insertion of
an ‘omnibus clause’, so that any activities that serve public purpose are
covered as eligible CSR activities. It has also proposed a hike in the cap for
administrative spends related to CSR activities.
No penalty for non-compliance has been
recommended by the committee as of now, as the CSR obligation requirements are
in their infancy. “The initial three years will be a period of learning for all
stakeholders,” states the committee’s report.
It has also ruled out a stringent mechanism
for monitoring of CSR expenditure by government agencies, leaving this
responsibility to directors of India Inc.
The mandate of this committee, led by Anil
Baijal, former secretary, government of India, was to examine various facets
relating to monitoring compliance and evaluation of CSR activities of India
Inc.
In its report submitted recently to the MCA,
the committee recognized that companies with a smaller CSR budget face
constraints in implementation of activities. It has thus recommended that only
those companies with a CSR budget of more than Rs 5 crore should be required to
undertake programme-based sustainable CSR activities with some measurable
outcomes.
With a view to provide some operational
flexibility, companies with smaller CSR budgets should be allowed to take up
project-based activities depending on their CSR spend from year to year.
Further, smaller companies could also combine their CSR activities with other
similar companies.
It has also added that this threshold of Rs 5 crore should
be reviewed and adjusted for inflation every three years. The committee has
also sought to increase the ceiling on administrative overhead costs from the
present 5% to not more than 10% of the CSR expenditure of the concerned company.
-Nagaland Post
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