If it wasn’t bad enough that the new Companies Bill makes it mandatory for companies to allocate and spend 2% of their average profits for the last three years on corporate social responsibility (CSR), the new corporate affairs minister Sachin Pilot plans to make this even more stringent. According to a news report in FE on Monday, Pilot plans to set up a national level SPV—where, say, industry bodies like Ficci and CII can have a stake—where all the funds will be deposited. This is expected to be around Rs 9,000 crore. The SPV will also come up with guidelines on how CSR spending is to be done—so maybe that school a company funded for its employees’ children may not actually qualify as CSR. And once there is a central SPV, it seems only a matter of time till, for instance, the political class may start clamouring for some sort of reservation in terms of where the money should be spent. Companies may think developing the area around their plant qualifies as CSR, it’s not clear whether the SPV will rule this will make the cut. A meeting in the capital tomorrow with leading corporates will provide some clarity.
All of which makes you wonder why India Inc is paying the taxes it does. Apart from the corporate taxes, excise duties, import duties and so on that India Inc pays each year, it pays another Rs 27,000 crore or so (individuals pay another Rs 5,700 crore) in the form of education cesses. This is used to partially fund the Rs 74,000 crore education budget. Of this, R34,000 crore is for elementary education and, after spending this amount, the government still needed to mandate private schools to reserve a fourth of their seats for candidates the government chooses. And while there is no mandatory jobs reservation in the private sector as yet, there is enough moral ‘suasion. Time for all of India Inc to adopt that famous Tata Steel tagline to “We also make profits”.