Recently, the Corporate affairs ministry has clarified that organizations bearing the cost to vaccinate those in their supply chain and the local community can be considered as a part of their corporate social responsibility (CSR) spending. As per the officials, it would be a great contribution to society and help in continuing the business operations smoothly without disruptions due to Covid-19 infections. As of today, there are three vaccine candidates in the advanced stage of development in India and two more are expected to be announced by the month of March.
However, as per MCA, vaccinating own employees cannot be considered as a part of CSR activity. Companies with a net worth of ₹500 crore or more, or a turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more, need to spend 2 per cent of their average net profit of the preceding three years on CSR activities.
This decision is seen as a great move to extend vaccination to workers and small suppliers associated with organizations especially in the informal sector.
FICCI and Ernst & Young (EY) recommended this move and estimated that around 22 per cent of the country’s population is mentioned in priority groups for the vaccination drive that is set to be inoculated by August 2021 as of now.
In the preceding year, the government had changed the CSR rules a bit to provide more flexibility to use this fund as per today’s scenario. Donations for Prime Minister’s emergency fund were considered as CSR spending as the fund was set up to fight against the Coronavirus pandemic.
CSR spending helps companies to connect with the society in a better way and let people get emotionally attached to the local community.