Monsoon session: 60% CSR spent on rural needs, health care, education

Around 60 per cent of the total CSR funds spent by companies in the last seven financial years were in the areas of education, healthcare and rural development-related activities, according to the government.

In a written reply to the Lok Sabha, the corporate affairs ministry also informed that during the given period, around 33 per cent of the total CSR amount spent by companies were in Maharashtra, Karnataka, Gujarat, Andhra Pradesh and Tamil Nadu.

Under the Companies Act, 2013, a certain class of profitable companies are required to shell out at least two per cent of their three-year annual average net profit towards CSR (Corporate Social Responsibility) activities in a particular fiscal.

CSR is a board-driven process and the board of a company is empowered to plan, decide, execute and monitor CSR activities of the company based on the recommendation of its CSR Committee.

Minister of State for Corporate Affairs Rao Inderjit Singh said in the written reply that the government does not issue any specific direction to the companies to spend in any particular geographical area or activity.

"An analysis of CSR data during the period 2014-15 to 2020-21, reveals that around 33 per cent of the total CSR spent by the companies is in the states of Maharashtra, Karnataka, Gujarat, Andhra Pradesh and Tamil Nadu. Similarly, around 60 per cent of the total CSR spent by the companies is in the areas of education, healthcare and rural development-related activities," he said.

In a separate written reply, Corporate Affairs Minister Nirmala Sitharaman said all CSR eligible companies have spent a cumulative CSR amount of Rs 24,865.46 crore in FY 2020-21. Out of the total amount, Rs 6,946.75 crore was spent on 'healthcare-related activities', including activities related to COVID-19.

Meanwhile, a total of 1,12,509 companies have been struck off from official records in a little over three years by the corporate affairs ministry, according to another written reply.

These companies have been struck off under Section 248 (1) of the Companies Act during the period from April 1, 2019, to July 12, 2022. This section allows Registrars of Companies (RoC) to strike off companies.

Singh said the government has undertaken a special drive for identification and striking off shell companies.

However, there is no definition of the term 'shell company' in the Companies Act, 2013.

"It normally refers to a company without active business operation or significant assets, which in some cases are used for illegal purposes, such as tax evasion, money laundering, obscuring ownership, benami properties etc," the minister said.

Out of the total 1,12,509 companies, the maximum number was in Delhi at 19,464. It is followed by Maharashtra (16,023 companies), Uttar Pradesh (12,823), West Bengal (11,044) and Tamil Nadu (6,989), among other states.