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Companies to add disaster management in CSR budget expenses; activities will now aim at providing better relief

After the official notification by The Ministry of Corporate Affairs, which included disaster management relief, rehabilitation, and reconstruction activities, companies have been directed to assist whenever needed.

The ministry’s orders in favor of corporates assisting in disaster relief management successively came after last year’s catastrophe of cyclone Fanny hitting Odisha, causing flooding and loss of life and land. This call to action is focused on expanding the Indian companies’ presence in situations of natural crisis.

Companies to expand their CSR bucket

Companies with a net worth of Rs 500 crore or more, turnover of Rs 1,000 crore or more or net profits of Rs 5 crore or more, are called to spend 2% of their average profits of the previous three consecutive years on the CSR activities thereof (Schedule VII of the Companies Act). Activities included under the umbrella of disaster relief management: Hunger poverty alleviation activities promotion of education vocational training, promotion of gender equality

Other funding inclusions under the CSR bracket:

Alleviating diseases such as HIV AIDs and Malaria Reducing infant and maternal mortality Other miscellaneous donations to relief funds set up by Central and State governments.

In the light of CSR initiatives, many companies have come forward to help offer rescue, relief and voluntarily services at desperate times. Companies have proactively provided support during calamities like the floods and landslides in Uttarakhand, Jammu, and Kashmir and Tamil Nadu in the last few years.

Parul Soni, global managing partner at Think Through Consulting, a specialized social sector consulting firm, said, “Usually there is no fixed budget set aside for such activities because disasters by nature are unpredictable.”

“In times of disaster, most firms work out contributions as a combination of CSR funds and philanthropy; employee donations are collected and distributed via government agencies or not-for-profit organizations, “Soni added.

Although there are no pre-specified budget criteria for disaster relief, the companies can provide assistance as deemed necessary, depending on the magnitude, support needed and the time of calamity.

Vicky Fernandez
Vicky Fernandez
Vicky Fernandez holds a doctorate in economics, and is an advocate of companies involved in CSR initiatives and activities. His recent publication ‘Companies and Corporate Governance’ is an excellent resource for understanding various topics in CSR. He studies deeply about how business and society are inter-related and why a company is accountable to society, making readers understand the basis of CSR.

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