Voicing concern over 2% corporate social responsibility spending norm for companies, Union Minister Piyush Goyal on Thursday said that CSR is not something that can be “forced down somebody’s throat”.
“I personally feel, 2% has become a budget and budget is a restraint and budget is not something which means that you are going to spend that,” the Power, Coal and Renewable Energy Minister said.
He was speaking at a CSR Awards-cum-Summit organised by Assocham. “I genuinely believe that CSR is not something that you force down somebody’s throat because the moment there is something which is made mandatory then it becomes ritualistic…,” Goyal said.
Under the Companies Act, certain class of profitable entities are required to shell out at least 2% of their three-year annual average net profit towards CSR activities. This norm came into force from April 1, 2014.
“So I oppose it because I say, even if we want to do it, it should be suggestive and we should encourage more and more people to go down that path rather than force it down and then the peer pressure will set in,” he added.
The minister also informed that he had opposed to making 2% corporate social responsibility (CSR) spending by private firms mandatory when it had come to the Parliamentary Standing Committee of Finance for review of the Company’s Law amendment.
“May be a good idea if all the big corporates of this country decide to recuse themselves from awards, because they are already doing a good job, they have already reached a certain scale and level, but nevertheless what we need to do is take this to people who really need to be encouraged,” he said.
Giving an example of the Ujwal DISCOM Assurance Yojana (UDAY) scheme, Goyal said, “The UDAY scheme…I made it optional, nothing mandatory and almost every state is signing now.”