Adopt Arm’s Length Approach For CSR: Arun Jaitley To India Inc

Finance Minister Arun Jaitley on Tuesday asked corporates to adopt arm’s length approach while taking up CSR activities and not pursue proposals to subserve their own ends.

“I must say that in last 2-3 years it (CSR spending) has begun well. It has begun well because in the very initial years in the government we did calculate that the width of the whole CSR if adequately implemented in the very first year should be in the tune of Rs 14,000 crore. Obviously, the entire amount was not invested,” Jaitley said after felicitating the recipients of HCL Grant 2017.

The Finance Minister added that mandatory CSR spending was introduced in 2013 and its implementation started in 2014.

Jaitley ruled there was lack of understanding and consciousness about CSR spending and the purpose it serves.

“But as years are moving ahead, I think it is an idea which is working well. Of course strict discipline has to be enforced that the expenditure cannot be camouflaged as corporates start supporting their own corporate proposal on this strength and therefore there has to be some arm’s length distance when we spend,” he added.

Jaitley said that government’s priority programmes are for sanitisation and housing for rural areas as also the irrigation.

There are some other areas also “by which we eventually want to supplement their (rural households) incomes — poultry, cattle, milk. The eventual objective is that we double their incomes,” he said.

A boost in rural income and consumption will have a cascading effect on the economic growth and help India achieve higher GDP expansion on a sustained basis.

“With its limited resources, it would not be entirely possible for the government to achieve this objective. There are alternate models which have been advocated. But it is only an agenda on the table. And it is here that the civil society has a very powerful and important role to play. And now that through the CSR mechanism there is a institutionalised process by which some resources have to be spent,” he said.

As the government pushes the envelope on rural development to spur economic growth, all of the over 6.4 lakh villages in India will be electrified by 2018, Jaitley said.

With exclusive grants coming in, villages will have regular road connectivity from 2019 onwards, he said.

“It is only in 2018 that every village in India should be electrified. Two years ago, we assessed that there are 18,000 villages to be electrified. Now almost at a very rapid pace those remote villages have been selected and I do believe that we will be able to meet that target,” he said.

Stating that India was at “a very initial stage of rural development,” he said, “Only towards 2019 that we believe that with additional grants coming exclusively from the government, villages would have regular road connectivity.”

The government corporate social responsibility (CSR) rule provides for corporates spending at least two per cent of their net profit on social initiatives with a view of giving back to the society.

“A few years ago when the idea of CSR was born in India, it was not free from doubt. There were many in the corporate world who felt that this was an additional tax which was being imposed. And therefore there was some resistance to the very idea,” he said.

(The Financial Express)

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