oppn parties Drop Jail Term As Penalty For Non-Compliance With CSR Norms

News Snippets

  • Flipkart assures employees that there will be no job or salary cuts due to the COVID-19 pandemic
  • Although it was obvious, but the government still clarifies that there is no need to switch off appliances and only lights need to be switched off on April 5 at 9pm after confusion in the minds of some people
  • PM Modi and President Trump decide "to deploy full strength of (Indo-US) partnership" to fight against COVID-19
  • 17 states have reported 1023 cases of coronavirus linked to the Tablighi Jamaat, which translates to 30% of all positive cases in India
  • The government says people should not use alcohol-based hand sanitizers before lighting diyas or candles on April 5
  • The railways say there is no certainty yet when services will resume after the lockdown and a final decision will be taken in the next few days
  • As coronavirus cases multiply in Assam, six north-east states seal their borders with the state
  • Power System Operation Corporation Ltd. (POCOSO) putting all systems and protocols in place at war-footing to ensure there is no grid failure due to reduction in demand on April 5 at 9 pm
  • Power ministry scotches rumours that the power grid might fail due to the 9-minute blackout called by PM Modi on Sunday, April 5
  • Centre asks people to wear home-made masks if it is absolutely essential for them to step out of homes
  • Centre asks states to allow licensed street vendors to sell essential items
  • 8000 samples were tested across India on April 2, but the government said that testing will be need-based and will not be used as a confidence-boosting measure
  • Air India operating special flights to fly passengers stuck in India since the lockdown
  • For the first time in history, Darjeeling loses first flush tea due to suspension of garden work for Covid-19 outbreak
  • Supreme Court asks journalists to be responsible and publish only the official version of news after it was brought to its notice that migrant exodus started after the 'fake' news that the lockdown will be extended to three months
Total count stands ar 3082 as India records 16 Covid-19 deaths, the highest in a single day
oppn parties
Drop Jail Term As Penalty For Non-Compliance With CSR Norms

By Sunil Garodia

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Writes for a number of publications.

If the Finance Ministry had a committee working on how to make Corporate Social Responsibility (CSR) more effective and meaningful and make companies comply with it, what was the rush to get the punitive amendments passed in Parliament? Just a couple of weeks after the amendment to prescribe jail terms for not meeting CSR requirements (which obviously raised hackles in the corporate world and legal circles), the committee, headed by Corporate Affairs Secretary Injeti Srinivas, has said that jail terms are not the answer and has suggested fines and putting the funds in an escrow account as alternatives. It has also recommended that CSR expenditure be allowed as a deduction from taxable income.

The committee has sensibly recommended that non-compliance should be a civil offence and it should be de-criminalized. It has suggested an increased fine of up to Rs 1 crore instead of Rs 25 lakhs as proposed in the amended Companies Act. It has also proposed that the unspent CSR funds should be allowed to be carried forward for three to five years by putting them in a separate account. The committee said in the report that "CSR is a means to partner corporates for social development and such penal provisions are not in harmony with the spirit of CSR." This is the line that the government should ideally adopt. 

But figures with the Ministry of Corporate Affairs show that companies have been lax in complying with CSR norms in the absence of punitive measures. Nearly fifty percent of the companies that fall under the CSR bracket (having a net worth of Rs 500 crore or turnover of Rs 1000 crore or net profit of Rs 5 crore) failed to file reports of how they spent the mandated 2 percent of the average profits they made in the three previous years under CSR; or even if they spent a single paisa at all. If the legal provision is there, companies cannot be allowed to flout it. Businessmen only understand the language of money. So if hefty fines are imposed and the unspent funds are taken away from them, they will try their best to comply. Hence, punitive measures are welcome but criminalizing non-compliance is not one of them. The government must review the amendments and drop the criminal penalty clause.