CSR spending by top 500 firms shrinks 60% in Punjab in FY21

Vijay C Roy

Chandigarh, December 14

Compared to other states in the northern region, the Corporate Social Responsibility (CSR) spending by top 500 corporates in Punjab has shrunk sharply. It declined by 60% in FY21 as compared to FY 20. The cumulative actual spends stood at Rs 42.62 crore in FY 21, down from Rs 105.95 crore in FY 20, according to a data shared by Minister of Finance and Corporate Affairs Nirmala Sitharaman in Lok sabha on Monday.

On being asked about the reasons, experts mentioned that it may be because of profitability of firms has been impacted during the pandemic, as a result, many that delivered negative returns were not compelled to spend on CSR. However, compared to Punjab, CSR spend in other states in the region was better in FY 21 compared to FY 20.

According to data, CSR spending in Haryana went down marginally(3.50%) in FY 21, while in Himachal Pradesh and Jammu & Kashmir it increased significantly by registering a growth of 49.50% and 129% respectively in FY21 over FY20.

The company spent funds on development of sectors such as tourism, education, healthcare, rural development areas, environment sustainability in the region.

Under the Companies Act, 2013, firms earning profits are required to contribute at least two per cent of their three-year annual average net profit towards CSR activities. The CSR provisions came into effect from April 1, 2014.

Every company with a net worth of at least Rs 500 crore or a turnover of Rs 1,000 crore or more, or a minimum net profit of Rs 5 crore during the immediately preceding financial year has to spend at least 2% of the average net profits, made during the three immediately preceding financial years, on CSR activities.

Overall, Nationally, CSR expenditure by top 500 companies in FY 2020-21 fell by 4.30% to Rs 17,672.40 crore, lower than the cumulative spends of Rs. 18,473.41 crore in FY2019-20, official data submitted to Parliament on Monday showed.

The Government monitors the compliance of CSR provisions through the disclosures made by the companies in MCA21 registry. Whenever any violation of CSR provisions is reported, action against such non-compliant Companies is initiated as per provisions of the Act after due examination of records and following due process of law.