President Pranab Mukherjee has asked the corporate sector to extend their corporate social responsibility (CSR) in rural areas by meeting the infrastructure requirements in government schools and investing in teacher up-skilling.

He said the companies can adopt blocks or districts for such intervention and this can be synergised with efforts to tackle problems like malnutrition and other health-related issues.

Addressing the national summit on CSR, organised by the Confederation of Indian Industry (CII) at Vigyan Bhawan in Delhi on Wednesday, the president said the Companies Act, 2013 which mandates spending on CSR activities, could help unlock an estimated amount between Rs 8,000 to 20,000 crore yearly, for social sector engagement.

“A structured development strategy is now required to ensure that these funds are efficiently deployed in areas most beneficial to society,” he said.

He said the notion of CSR is not new to India, and Indian industry has displayed keen interest in contributing to the betterment of the society over the years. But now the CSR has received a renewed impetus through a legal framework.

Section 135 of the Companies Act 2013 mandates every company with net worth of Rs 500 crore or more, turnover of at least Rs 1,000 crore and net profit of at least Rs 5 crore, to constitute a separate committee on their board and spend at least 2 percent of their profits on CSR activities.

Mukherjee said that inclusive growth is a strong objective of the public policy and it calls for intensive collaborative efforts of the government and the corporate sector to provide the basics for improving the quality of life in rural and urban areas.

President Mukherjee also launched ‘Sammaan’, a common platform developed jointly by BSE (Bombay Stock Exchange), CII (Confederation of Indian Industry) and IICA (Indian Institute of Corporate Affairs), that will facilitate corporates to comply with the requirement. As of today, 1294 companies listed on BSE are required to adhere to this regulation and expected to spend Rs 7850 cr in CSR activities in FY’16.

‘Sammaan’ will give a credible platform to more than 20 lakh NGOs operating in India. It will adopt a rigorous process to list NGOs on this platform which the corporates can choose from. It will also provide a letter to the CSR committee of corporate houses that fulfil the obligations under Section 135 of the Companies Act. The platform will also be an information warehouse on NGOs and their CSR activities with support from corporate houses which can serve as a useful tool to analyse overall impact of such activities on society at large.

In earlier session, Bhaskar Chatterjee, director general, Indian Institute of Corporate Affairs (IICA), a think tank under ministry of corporate affairs, said, “Civil society is the implementing agency and is an important aspect for implementing CSR.” He added that any kind of trust deficit between the corporate and civil society should be addressed urgently.

Some other representatives of corporate houses found the government to be over regulatory on the issue of implementing section 135 of the Act.

Rakesh Bharti Mittal, vice chairman of Bharti Enterprises said corporate houses are coming forward in complementing various efforts of social development by government of India. But, he added, they face problem in finding the right implementing partner. “More than 95% of NGOs [operating in India] are not transparent. Once you write the cheque, you don’t really know where the money is spent. They should provide complete transparency of every single penny spent."

Prabitra Narayan Roy Chowdhury, advisor, strategic planning and sustainability, Adani group said the regulatory aspect of CSR has been well addressed by the government and now, “Government should not over regulate. Instead it should facilitate."

Harpal Singh, mentor and chairman Emeritus Fortis Healthcare said while the first year of implementing Companies Act and mandating CSR spending has been remarkably successful in bringing CSR from backroom to boardroom activity, there are other aspects that need to be addressed. "If money is spent on social agenda it should be well spent. The inefficiency should be seen as public crime. Government should define the directions but not determine the path for corporate houses. It should invoke industry to do things but do not put conditionality around it," he said.