Making CSR count

| Updated on April 29, 2021

Using India Inc’s help can drive the vaccination programme   -  The Hindu

The Centre should leverage CSR funds for vaccinations and consider tax breaks for India Inc

As the second wave of Covid-19 rages across the country, the battle to contain it cannot be fought by the government alone. While the structural shortcomings in healthcare infrastructure can be redressed over the coming years, the government will need all the help it can get to address the immediate challenges of accelerating the vaccination programme and meeting the demand for oxygen, hospital beds and medicines. Corporate India has risen to the occasion; many leading companies have come forward to supply oxygen, cryogenic vessels, and are constructing hospitals dedicated to Covid-19. The Centre should rally the support of India Inc in fast-tracking vaccinations. Of the eligible adult population, only 3 per cent have received the second dose of Covid-19 vaccination so far. Allowing companies to use funds set aside for Corporate Social Responsibility activities towards vaccination can speed up the inoculation drive.

The Ministry of Corporate Affairs is aware of the role that corporates can play in the Covid-19 pandemic. It has been making a series of changes to the rules governing CSR funds since last March. Last year, it allowed companies to spend CSR funds on Covid-19 relief, including preventive healthcare and sanitation and on research and development of Covid drugs, vaccines and medical devices. The ambit was expanded further this year to include awareness or public outreach programmes on Covid-19 vaccination and setting up of makeshift hospitals and temporary Covid care facilities. While the clarifications given so far are welcome, there is ambiguity on whether Covid-19 vaccinations per se are covered under CSR. While it can be argued that vaccination is covered under ‘promoting health care including preventive healthcare’ specified in Schedule VII of Companies Act, 2013, the Ministry officials have not explicitly accepted vaccination as a CSR activity. A clarification will help in this regard. The government should not be rigid about the CSR funds usage being limited to vaccination of people other than employees. The Ministry seems to be bound by the Code on Wages, 2019 and other statutes, in laying down that expenses made on employees cannot qualify as CSR spend. But given the unprecedented crisis, the Ministry can modify the rules to allow for inoculation of employees and their families as CSR activity.

Approximately, ₹10,000 crore is available with listed companies annually for spending on CSR activities. If the eligible unlisted companies are taken into account, the available sum may be larger. This can be handy in supplementing the expenditure of the Centre and States on vaccination. Many of these companies have a presence in rural areas. This will ensure that the drive goes beyond the large cities. The Centre can incentivise companies by allowing weighted deduction on the amount spent on vaccination. Since this expense is not likely to extend beyond a couple of years, it will not result in a material revenue loss to the exchequer.

Published on April 29, 2021

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