AUTO: SLOWDOWN
P.12 HITS INVESTMENTSTHE PARLIAMENT RECENTLY
passed amendments to the Companies
Act that aim to strengthen laws that
govern corporate social responsibility
(CSR). It is now not only mandatory,
like tax, there is also a regulator that
will arm twist companies in case of
non-compliance and penalise them,
taking us back to inspector raj.
Now, unspent CSR funds of that
fiscal have to be transferred to an
escrow account to be spent within
the next three financial years. Any
unutilised amount in the account
will be transferred to a government
fund. There are penal provisions for
non-compliance of CSR provisions.
Violation will lead to fines for the
company and defaulting officers
ranging from 50,000 to25 lakh.
Officers can also be imprisoned for up
to three years.
Such an approach will hamper
companies trying to do good work.
The extra burden of compliance and
reporting will force CSR leaders to
take a short-term view of projects and
focus on ‘spends’ instead of looking at
societal problems holistically. What
was needed was a system of positive
reinforcement for firms doing good
work so that it builds pressure on
others to follow suit. Companies with
profits of `5 crore or a turnover of
`1,000 crore or a net worth of ` 500
crore are mandated to spend 2 per
cent of their three-year annual average
net profit towards CSR activities.@sonalkhetarpalECONOMY: PUT
P.10 HOUSE IN ORDERCSR
TIGHTER GRIP
THE NEW CSR NORMS
WILL FORCE COMPANIES
TO FOCUS ON
SHORT-TERM PROJECTS.
By SONAL KHETARPAL
Illustration by RAJ VERMA