Do not use CSR funds for govt schemes: House panel

Expenditure "irregularities" in Corporate Social Responsibility (CSR) funds have caught the attention of a parliamentary panel, which on Tuesday grilled representatives of the Ministry of Corporate Affairs and asked a written reply from it on why the companies are spending in this head.

A number of MPs in the Parliamentary Standing Committee of Finance, headed by senior Congress leader M Veerappa Moily, also took objection to the use of CSR funds for implementing the Centre's schemes, including Prime Minister Narendra Modi's pet project "Swachch Bharat Abhiyan" (SBM).

Interestingly, Minister of State for Corporate Affairs P P Chaudhary had in September last year asked over 11 lakh companies to contribute 7% of their CSR funds to SBM and also urged them to undertake a cleanliness drive.

During the panel's meeting on Tuesday, which was also attended among others by former prime minister Manmohan Singh, members asked the secretary and the additional secretary of the Ministry of Corporate Affairs as to why the companies are not spending their CSR funds for development of local areas.

Some members also felt that the Centre was "misusing" grants in CSR and asking the companies to spend that fund on the implementation of central government schemes, a source said.

"Many members were of the view that CSR fund should not be used for the spending of government schemes like the Swachch Bharat Mission. We told the ministry to ask companies not to use the CSR funds for government schemes," a source in the panel said.

The Parliamentary Committee on Finance had last year suggested stricter monitoring and compliance mechanism for proper spending of CSR funds.

Under the Companies Act, 2013, companies are required to spend at least 2% of their three-year average annual net income towards corporate social responsibility (CSR) activities in the financial year.

In March last year, the Centre had issued a show-cause notice to 1,018 companies for non-compliance of CSR norms.