The Crisil Foundation has conducted a study which suggested that the coronavirus pandemic is likely to exhaust most of the CSR funds of the companies this fiscal year. According to the foundation, India Inc. has already allocated over 80% of the annual CSR budget to address the pandemic, which could impact spending on other areas this year.
The COVID-19 pandemic called for emergency spending in the country. The lockdown imposed to contain the spread of the virus delivered a major shock to the economy. The labour crisis, lack of employment and rising need for essential services required immediate attention. In addition to this, the safety of the frontline workers who were working to contain the spread of the pandemic, was also of high preference. While balancing these issues, the country also had to invest in research in order to discover a cure or treatment to defeat coronavirus disease.
In order to contribute in the fight against the virus, the firms in India have spent significantly in the form of a contribution to the PM CARES Fund and other relief funds to help the state control the situation; distribution of food, masks, personal protective equipment for healthcare workers to ensure their safety; or provision of relief material to the needy to make sure no one loses their lives over essentials.
The Crisil Foundation drew up a list of top 100 companies by revenue in and CSR spend each in the country in fiscal 2019. It then checked whether they were alive to the need to alleviate the widespread distress caused by the pandemic. According to the study, of the total 200 companies, 70 appeared in both lists, while 60 in only one. Of these 130 companies, 113 spent on pandemic-related mitigation, according to publicly available data until 15 May.
In less than two months, 84 of these companies (including support through the corporate group) spent ₹7,537 crores on causes that can be classified as CSR spend. The remaining 29 companies either contributed to other funds (₹373 crores), and/or facilitated voluntary employee donations (₹84 crores) that cannot be classified as CSR spend, or donated solely in kind (food and masks), for which assigning a monetary count was difficult.
Of the 84 companies, as many as 56 (or 67%) were private sector companies, accounting for over two-thirds of the total amount spent on pandemic-related support. The 24 public sector units (29%) contributed 30%, while seven private (foreign) sector companies brought in the rest. Region-wise, 36 companies in Maharashtra, which accounts for a third of all covid-19 cases in the country, stand out as they accounted for 63% of the total spending.
Maya Vengurlekar, chief operating officer, Crisil Foundation, said: “Interestingly, the 130 companies analysed by Crisil accounted for nearly 80% of the total CSR spend by all listed companies in fiscal 2019. Assuming other companies would have followed a similar path, India Inc has already allocated over 80% of the annual CSR budget to address the pandemic. This could impact spending on other areas this fiscal.”
The CSR spending has continued to grow in the five years since it was mandated in the Companies Act, 2013. There have been companies who have spent more than the recommended amount and there have been companies that do not meet their targets. However, the growth in spending, as well as involvement by corporates in national development, has been overwhelming.
The problem is though, that the CSR spending each year is focused on certain given sectors such as education and skill development, healthcare and sanitation and rural development; and the areas such as environment, national heritage conservation and sports are totally neglected by the companies. This uneven structure has contributed to the uneven development of the nation. This year around, owing to the pandemic, the spending will be even more uneven.
