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CSR Funds Cannot be Used To Vaccinate the Employees: Ministry of Corporate Affairs

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The Ministry of Corporate Affairs has rejected the proposal by corporates regarding directing the CSR funds for vaccinating the employees of the company.
As India was engaged in combating the COVID-19 in the last year, there was a need for comprehensive collaboration for effective implementation of containment strategies. In order to ensure that this is taken care of, the government of India had tweaked the CSR rules to give more flexibility to use this fund in a way that suits the current realities. Accordingly, in August, life sciences companies with research and development (R&D) activities were allowed to spend their CSR funds for finding therapies for covid-19 subject to riders. It removed the restriction on life sciences companies spending CSR funds in activities which are part of their normal course of business.
As the corporates suspected the flexibility of rules in the government, it proposed that its CSR funds should be allowed to use for vaccinating their own employees. The recommendation had come from FICCI and Ernst & Young in a report titled: ‘Protecting India: Public-Private Partnership for vaccinating against COVID-19’. It was also proposed by Kiran Mazumdar Shaw, Chairperson of Biocon, in an exclusive interview with Moneycontrol, saying that this could possibly lessen the burden on the government, which is grappling to get a measure of the exact cost to vaccinate the entire country and getting the logistics and supply chain in place to administer the vaccine.
In response to queries from the industry, the ministry has taken the view that CSR spending could cover the cost of vaccinating those in the supply chain of a business and the local community but not for its employees. This is because “Spending on employees is not the philosophy of CSR,” explained the government official who spoke on condition of anonymity.
The Ministry clarified, businesses paying for vaccinating those in their supply chain and the local community could show it as their CSR spending. The move would enable corporations with many small suppliers especially in the informal sector to extend vaccination to their workers.
The government has promised to vaccinate 300 million people, including health workers, police, municipal workers, the elderly, and those with co-morbidities. Eventually, private players will be allowed to sell vaccines in the open market, but the price of the vaccines are likely to be more expensive.
The government has thereby proved that the CSR law is not just a namesake law in the country. It has a special mention in India’s development story.