Employee vaccination spending may not classify as CSR, says Centre

Many firms are learnt to have approached ministries such as finance, corporate affairs and even health, seeking approval for the deployment of CSR funds to vaccinate their employees.

The Centre is reluctant to permit India Inc to classify their employee vaccination spends under corporate social responsibility (CSR) or allow them to use the funds exclusively for employee inoculation.

However, it may consider companies’ spends as CSR if the larger community is included in their vaccination drive.

“If it’s exclusively for employees, they can claim these costs under employee benefit expenses, but not under CSR,” said a senior government official.

But if companies undertake community vaccination initiatives, which may or may not include employees and their families, the costs incurred might be counted under CSR, he added.

However, this proposal is still under deliberation, he said.

Many firms are learnt to have approached ministries such as finance, corporate affairs and even health, seeking approval for the deployment of CSR funds to vaccinate their employees.

This comes at a time when the Centre has allowed state governments to directly procure doses from vaccine manufacturers.

India is currently facing a vaccine shortage even as daily new cases of Covid-19 infections have surged to around the three lakh mark.

In January, the ministry of corporate affairs had said that the funds companies spent on awareness programmes and public outreach campaigns regarding the vaccination drive could be classified as CSR activity.

No mention had been made of vaccination expenses.

However, experts are of opinion that this could be allowed, even if for a limited period, to help the vaccination drive.

“It’s a national disaster, so the current framework has to be relooked at.

"If companies won’t provide vaccines to employees, the cost will have to be borne by either the employees or the government.

"Hence, it is better to do it under CSR as it will not just hasten the vaccination drive, but also make it way more effective.

"If not fully, allowing it for a limited time period would be also helpful,” said Pavan Kumar Vijay, founder, Corporate Professionals, a company that offers business advisory services.

Amit Tandon, founder and managing director of Institutional Investor Advisory Services, India (IiAS), said that the government could encourage companies to pay for non-employees too, but it would be beneficial if they do it for their own staff under CSR.

“It’s a social good,” Tandon said.

An analysis of CSR spends in previous years shows that CSR budgets could help fund a significant chunk of vaccinations if companies extend them to non-employees too.

Indian companies spent Rs 17,885 crore on CSR in FY20.

There have been variations over the years, but an average of Rs 15,858 crore was spent over the last five years.

On Wednesday, the Serum Institute of India pegged the cost of the Covishield vaccine at Rs 400-600 per dose.

If CSR funds are used, it could pay for 26 crore (or 260 million) doses.

However, this would depend on the fortunes of the companies concerned.

The overall CSR spends fell 4.1 per cent from Rs 18,655 crore in FY19 to under Rs 18,000 crore in FY20.

Data from the Centre for Monitoring Indian Economy reveal that corporate profitability fell 9.5 per cent in FY20.

Companies are required to spend at least two per cent of their average net profits over the previous three years on CSR.

Photograph: PTI Photo