'Govt may apply stick on cos which do not spend money on CSR'

Dec 20 2012, 20:11 IST
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Spending money on CSR?. (thinkstock) Spending money on CSR?. (thinkstock)
SummaryIt was asserted that spending on CSR should not be made mandatory by law.

The new FICCI Chief Naina Lal Kidwai has suggested that the government could "apply stick" on companies which do not allocate funds for CSR activities but such spendings need not be made mandatory.

"The trouble is that the minute you make some thing mandatory people begin to find ways around...you encourage people to find the right answer and you shame them into well if so many companies are doing it why aren't you and then if they still aren't doing it...then you have to apply stick," she said.

She, however, asserted that spending on CSR should not be made mandatory by law but guideline approach is best thing to begin with.

Reposing faith in India Inc's sensitivity towards CSR, Kidwai said, "Lets not assume the companies will not do it you may be surprised how many companies are already doing if it can be seen as a good for the company."

The first woman president of the the industry chamber also cited the examples of Tatas and Birlas who have made their mark in the areas of CSR over the years.

"What they have done in the space of the CSR over the years is a demonstration of India as it was growing up and through that phase how it engage with community. So we need to bring some of that back," she added.

"I have a faith in the fact that corporates at the end of the day will rise to this in a manner which works and we don't get another series of rules which in turn begin to create there own sets of problem."

It is going to the a challenge going forward because it is a whole new era for India, she added.

As per the Clause 470 of the Companies Bill passed earlier this week by the Lok Sabha spending 2 per cent of net profit on CSR (Corporate Social Responsibility) is compulsory for companies that meet certain criteria.

Firms having Rs 5 crore or more profits in the last three years have to spend on CSR activities. One of the major proposals is that companies have to mandatorily spend 2 per cent of their average net profit for CSR activities. If companies are unable to meet the CSR norms, they will have to give explanations, the Bill said.

In case, the companies are not able to do the same, they have to disclose reasons in their books. Otherwise, they would face action, including

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