Soon, public sector undertakings (PSUs) unable to spent their CSR funds will have to part with it as the department of public enterprises (DPE) is mulling over setting up a sustainability fund in collaboration with the World Bank.

The DPE issued a revised guideline on CSR in April this year according to which the unspent money will be subsumed into the sustainability fund which will then be used to finance social responsibility projects.

Since 2010, a total of Rs 2,700 crore has been lying unused with the central public sector enterprises (Rs 300 crore in the year 2010-11; Rs 1,200 crore each in 2011-12 and 2012-13).

OP Rawat, the DPE secretary, says that the department is focusing on the implementation of the new guidelines, adding that workshops have been conducted across the country to create awareness regarding the same. However, the mere thought of having to part with funds has not gone down well with the PSUs. Many have raised flags on the clause on the lapse of funds not used within three years.

Rawat says that PSUs are eventually able to utilise only Rs 600-700 crore of the Rs 2,000 crore set aside annually under the CSR overhead.

“If the companies fail to spend the required amount on CSR activities, the fund would be taken up by us to form sustainability fund. We are planning to form it with the help of the World Bank. The idea is to make sure they use it within the fixed time frame,” he said.

Under the earlier guidelines, the unitilised CSR fund did not lapse. Instead, they were carried forward to the next financial year.

The new guidelines, the department expects, will enforce more seriousness among the PSUs’ administrations regarding corporate social responsibility.

Under the new framework, central PSUs will have to utilise the unspent part of the amount earmarked for CSR within two financial years. They will also have to explain why the funds were spent in the year they were sanctioned.

According to the secretary, only a handful of the Ratna companies have been able to spend the full amount, ONGC and Coal India being the most notable ones.

“Middle level or smaller companies have always been hesitant to spend on CSR activities. They face pressure from NGOs and local people to design spending according to their needs,” he adds.

The department’s efforts at sensitising the senior executive of the PSUs seems to have paid off with companies like GAIL and ONGC swinging into immediate action in the aftermath of the Uttarakhand calamity. Both companies are now undertaking rehabilitation activities for villages that were destroyed by the flood.