PSEs may lose status for CSR shortfall: Patel

Public sector enterprises (PSEs) may lose their Mini-ratna, Navratna and Maharatna status, if they fail to spend the stipulated amount on corporate social responsibility (CSR) in a time-bound manner.

Besides, they will be answerable to the department of public enterprises for failing to do so, Minister of Heavy Industries and Public Enterprises Praful Patel told reporters on Monday at the inauguration of the National CSR Hub at the Tata Institute of Social Sciences (TISS).

"The ministry will not be reactive but pro-active. It will monitor the CSR spending by PSEs as per the department guidelines and pull up the PSEs concerned for their failure. They may lose their present status."

Patel hoped the private sector will also share a part of their profits for CSR, as the government or PSEs alone cannot carry on such activities to support sustainable development and inclusive growth.

Patel said the department will soon identify large projects under CSR targeting dalits and tribals. Remote and mofussil areas will also come under the the PSE fold.

"They could be in the areas of water, tribal development, education, health. However, the objective of such pilot projects is to have a visible impact," the minister noted.

He said the National CSR Hub at TISS would have a mandate in the areas of research, publication and exchange of ideas, capacity building and advocacy.

Patel said the CSR budget will be announced after a board resolution on the percentage of net profit.

"For a company that had a net profit of less than Rs 100 crore (Rs 1 billion) in the previous year, the expenditure range for CSR during a financial year will be 3-5 per cent of the net profit, while for companies with a net profit of Rs 100 crore to Rs 500 crore (Rs 1 billion to Rs 5 billion), it will be 2-3 per cent of profit."

He reiterated that the CSR budget will be fixed for each financial year and it would not lapse.

However, it will be transferred to a CSR Fund, which will accumulate – as in the case of non lapsable pool – for the North East.

The minister said project activities identified under CSR are to be implemented by specialised agencies and not by the staff of the CPSE concerned. Specialised agencies could be made to work alone or in tandem with other agencies.

On the mobilisation of Rs 40,000 crore (Rs 400 billion) through disinvestment in the current fiscal as proposed in the budget, Patel said this will be done keeping the government holding up to 51 per cent.

"Part stake sale of the listed companies and those profit making companies will be considered. Besides, some of the undertakings, which are yet to be listed, will also be taken into account for disinvestment. For perenially sick companies, the government will have to take a policy decision."