In December 2019, unknown to the world, the coronavirus, which, in its initial stages was considered to be pneumonia, became the world’s deadliest disease ever. China being the epicentre, the virus spread rapidly to almost all the countries and caused innumerable loss of human lives as well as affected a lot of businesses. India too has not been spared with the government taking strict measures to fight coronavirus.
In the past few weeks, the number of cases in India have increased at an alarming rate; the number of affected countries worldwide tripled too. India is a densely populated country, so keeping in view the rapid spread of this disease via close contact, a total 21-day lockdown was announced to help fight coronavirus. The World Health Organisation has declared Covid-19 a pandemic as a result of which the central government has taken a call to allow India Inc to bring into use their mandatory CSR (Corporate Social Responsibility) funds in order to fight coronavirus.
Corporate social responsibility or CSR is a provision in the Companies Act of 2013 wherein companies with a net worth of Rs 500 crore, or turnover of Rs 1,000 crore or net profit of Rs 5 crore or more, are suppose to set aside 2 percent of their average net profits the preceding year on activities that shall benefit the society.
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The Finance Minister of India, Nirmala Sitharaman confirmed on Twitter that spending of CSR funds for COVID-19 will be considered an eligible CSR activity. The Government of India has decided to treat the coronavirus pandemic as a notified disaster too thus paving way for the State Disaster Response Fund (SDRF) as well.
The CSR funds may be spent on a varied amount of COVID-19 related activities such as research, healthcare facilities, technology, sanitation and disaster management. Many major corporations such as Larsen and Toubro, Dabur and ITC are looking to fund research work at the top level institutions to support the government’s decision to broaden the scope of mandatory corporate social responsibility funds spending. This investment will also help in boosting R&D investments in science, technology, medicine and engineering in the country.
The rising number of coronavirus cases in India has pushed the government to impose a 21-day lockdown which will in turn hamper the operations and profitability of the major sectors. The center has announced a fiscal relief package worth Rs.170,000 crore to rehabilitate the weak and underprivileged sections to enable them to tide over these difficult times. The PM Garib Kalyan Yojana is aimed at protecting the migrant and daily wage workers, rural poor and women specifically. According to Nirmala Sitharaman, the package is intended to reach out to the poorest of the poor, so that they do not face difficulty in buying essential supplies and meeting their daily needs during the coronavirus lockdown.
The companies are divided on the easiest way to accumulate the CSR funds. Some corporates are of the opinion that a government-run fund which collects the incoming money is better and time saving. Having a Central fund will enable companies or individual businesses to transfer their CSR funds and give the government the reins to spend this money in the best possible way. The funds can be used to boost the healthcare infrastructure and to purchase the necessary protective gear for the on-ground healthcare providers. The funds can also benefit those who have been affected by the outbreak of this pandemic monetarily.
While the other half believe that the spending of these funds should be left to individual companies. The companies can therefore support the projects they deem fit. One such example is that of Reliance Industries who have pledged their support to various Covid-related initiatives. The CSR funds however cannot replace public spending by the Center and States even if entirely dedicated to Covid-related spending and can only support the efforts of the government.
In the battle against the deadly coronavirus epidemic, many prominent personalities of India Inc have joined forces and are doing their own bit. Sir Ratan Tata has committed Rs 500 crore to source protective equipment for onfield healthcare personnel, respiratory systems for treatment of increasing cases and testing kits to fight coronavirus. These funds will go a long way in providing personal protective equipment, setting up modular treatment facilities for infected patients, knowledge management and training of health workers and the general public. Reliance Industries Limited is increasing their production limit to produce 100,000 face-masks per day to aid the nation’s medical workforce in combating the coronavirus challenge. Another corporate giant, Mahindra and Mahindra also offered their hospitality unit as a medical care facility and are working towards figuring out how their facilities can manufacture ventilators.
The Chief Minister of Maharashtra, Uddhav Thackeray has urged the companies to spend their CSR funds to feed the homeless and the needy in these difficult times.
The effects of the COVID-19 pandemic have been felt far and wide. In these tough times the Center and India Inc have united to fight this crisis and form a collaborative platform for public health and to reach out to the deprived and the underprivileged sections of the society. CSR has immense potential to improve the lives of a majority of Indians.Thus it is important for the corporates to use this opportunity not just as a business activity but raise the bar and make a meaningful contribution to the society.
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References:
- “Corporate affairs ministry to count funds spent to tackle Covid-19 under CSR activity” by Gaurav Noronha for The Economic Times, March 23, 2020
- “Companies can utilize CSR funds to deal with outbreak” by Gireesh Chandra Prasad for Livemint on March 24, 2020
- “How should India Inc deploy its CSR funds for Covid relief?” by Tina Edwin for The Hindu on March 25, 2020
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