Arun Jaitley: Corporate social responsibility was seen as additional tax
New Delhi, Feb 21: Union Finance Minister Arun Jaitley on Tuesday said the idea of mandatory corporate social responsibility spend, though initially resisted, has taken off well and it will contribute to doubling of rural population's income.
"Conventionally, corporate philanthropy was lesser known in India. But looking at the past 2-3 years, it has begun well as an institutionalised mechanism," Jaitley said here in his keynote address after felicitating the recipients of HCL Grant 2017.
"The eventual objective is to double the income of those living in rural areas. The government cannot do it on its own. There is an important role of civil society," he added.
Talking about the initial resistance when CSR was introduced in 2013, he said: "It was not free of doubt. There was some resistance. Corporate world thought of it as an additional tax."
The new CSR rules under Section 135 of the amended Companies Act, 2013, came into force from April 1, 2014. Companies falling under the ambit of the new rules were mandated to spend two per cent of their net profit (average of last three years) on CSR activities.
CSR, if adequately implemented in its very first year (2014-15), should have seen investment of Rs 14,000 crore.
"Obviously, the entire amount was not invested. There was lack of understanding, lack of consciousness about it. But it has begun well," he said.
Through the CSR, an institutionalised mechanism has been put in place by which some money has to be spent on the rural India, Jaitley said.
He said the role of non-governmental organisations) in rural India continue to lag, which otherwise should get a boost from assistance provided by CSR activities.