Cash-strapped and fund-starved, successive Governments of Telangana State have been eyeing the coffers of the corporate sector, albeit in vain, for fulfilment of their basic responsibilities towards people.
The provision for Corporate Social Responsibility (CSR) under the Companies Act, 2013 has manifested as the proverbial goose that lays golden eggs for the rulers, who have been pressuring corporates to part with funds.
Meetings are convened by district collectors and top bureaucrats and companies are being called upon to align their CSR activities with the Government projects, industry sources informed.
It has been learnt that, very recently, a meeting was held with pharma company executives, which was addressed by a high level functionary from the Health department. Representatives of about 20 top pharma companies attended the meeting.
“In the meeting, we were told that our CSR money was Government’s money, and that we would be assigned Government hospitals the maintenance of which we must fund,” a delegate who attended the meeting told, under the condition of anonymity.
They were also told that the next meeting would be held with the chairpersons/managing directors of the respective companies.
“We are already supporting Government hospitals and schools with equipment donations under CSR initiative, and tried to explain the same. But we were told in unambiguous terms that the Government would determine how the funds are spent,” another source revealed.
Field level officials of the Telangana Pollution Control Board (TGPCB) in certain districts with high concentration of industries too reportedly received instructions from the respective district collectors to seek details such as the net profit for the past five years, fund allocation for CSR, and the sector and location they spent the same in. A format was circulated to all the industries for the same.
A letter was also addressed from the TGIIC a year ago, to the companies in the Industrial Park, Pashamylaram, seeking funds to the tune of ₹15 crore for the development of an approach road from the Outer Ring Road (ORR). The ₹95 crore road was to be laid by the Roads & Buildings department and funded by TGIIC, but due to COVID and other issues, there had been a cost escalation, the letter said.
This trend has existed for the past decade, during which several industries have received letters from district collectors, the police, industries department, and factories department, asking them to contribute funds to the Government for taking up various developmental/welfare activities.
What does Companies Act, 2013 say?
Companies Act, 2013 provides that the board of any company having a net worth of ₹500 Crore or more, or turnover of ₹1000 crore or more, or net profit of ₹5 crore or more in the preceding financial year, has to mandatorily formulate a Corporate Social Responsibility Committee.
At least 2% of the average net profit in the preceding three financial years should be spent on CSR activities, with priority accorded to local area.
“Our outlay for the CSR and the activities we take up under the head are determined at the beginning of the financial year, and cannot be altered midway through. Besides, the Act does not consider monetary funding to the Government as CSR activity,” representative of a company said.
He also added that the enforcement of the Act is the Central Government’s responsibility.
“The State Government can only appeal to the companies to consider some projects and let the latter take a call on the same. Central Government should issue necessary instructions, or else, if it is also of the same opinion that CSR amount is State Government’s money, then necessary amendments should be made to the Act, so that the companies will deposit the CSR amount to the State Government, and relieved of the time, establishment and effort to take up the activities,” he said.
