India Frees About $2 Billion Philanthropy Funds to Fight Virus
India allowed companies to use their CSR funds to prevent the spread of the coronavirus.
(Bloomberg) -- India allowed companies to use their philanthropy funds to prevent the spread of the coronavirus, corralling private resources to fight the pandemic.
The money can be spent on activities related to Covid-19, including promotion of health care and sanitation, the Ministry of Corporate Affairs said in a notification Monday. A total of 21,397 companies spent more than 136 billion rupees ($1.8 billion) on social programs in the year through March 2018, according to latest government data.
The measure comes as India weighs the possibility of a fiscal stimulus to buoy its economy, already set for the weakest pace of expansion in more than a decade. Countries from the U.S. to Germany have pledged spending to support their economies from the pandemic that’s already claimed thousands of lives and disrupted normal life across the world.
“Companies need to ensure whatever allocations they have done for CSR they not only spend that but go beyond,” said Rajeev Ahuja, a development economist, formerly with the World Bank. “They can spend more on awareness campaigns for practicing hygiene and social distancing.”
While the number of people with the infection in India is still below 500, any surge in cases may force the government to boost spending on hospital infrastructure, medical supplies and equipment, as well as provide financial support to economically vulnerable sections of people forced to stay at home because of lockdowns. Slowing expansion in Asia’s third-largest economy has meant tax collections have lagged estimate, straining government resources.
The clarification comes as some companies are required to spend 2% of their average profit over three years on corporate social responsibility activities that include support in the event of a national disaster. Activities to support the fight against coronavirus became eligible to be counted as CSR spending after the outbreak was deemed a national disaster subsequent to the World Health Organization declaring it a pandemic.
“This would lead to better utilization of funds as earlier companies were not able to meet mandatory CSR requirement of 2%,” said Amit Maheshwari, managing partner at Ashok Maheshwari & Associates, a chartered accountancy firm in Gurugram, near New Delhi.
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