In a major development that could encourage India Inc to fight against Covid-19, the Ministry of Corporate Affairs (MCA) has announced that the funds spent towards containing the Covid-19 outbreak will be contributed considered as corporate social responsibility (CSR) activity of companies. In a circular, the MCA added, "Keeping in view of the spread of novel Coronavirus (COVID-19) in India, its declaration as a pandemic by the World Health Organisation (WHO), and, the decision of the Government of India to treat this as a notified disaster, it is hereby clarified that spending of CSR funds for COVID-19 is eligible CSR activity."
The MCS further added that the funds allocated towards promoting healthcare, including preventive healthcare and sanitation and on disaster management would come under the purview of the company's CSR obligation. As per a report in the Economic Times, the circular further highlighted that items as per Schedule 7 of the CSR policy, which identifies the categories of work that are considered as CSR activity, may be interpreted liberally by the government.
A Tweet by Finance Minister Nirmala Sitharaman read, "In view of the spread of novel CoronaVirus in India, its declaration as a pandemic by the WHO, and the decision of Government of India to treat this as a notified disaster, it is hereby clarified that spending of CSR funds for COVID-19 is eligible CSR activity."
Industry welcomes the decision
Soon after the announcement was made, industry players argued that the government should create a portal in this regard for better coordination. Pavan Kumar Vijay founder of Corporate Professionals added, for the purpose, it is suggested that the Government may immediately create a portal on which specific requirements by way of equipment, medicines may be posted and the corporates may be permitted to contribute in cash or kind towards those specific requirements."
Notably, the amended Companies Act 2013 calls for the mandatory contribution of 2 % of a company's average net profit in three years on CSR activities. Last week, the Confederation of Indian Industry (CII) and the Associated Chambers of Commerce and Industry of India (ASSOCHAM) suggested the government combine the resources of the private sector towards fighting the Covid-19 outbreak.