Allow CSR in chief minister’s funds, Mamata Banerjee urges PM Narendra Modi

West Bengal chief minister Mamata Banerjee has urged Prime Minister Narendra Modi to treat contributions by business houses to the chief minister’s relief funds as money spent by companies on corporate social responsibility (CSR) activities, which would entitle the donors to claim tax breaks.

If the proposal is accepted by the Centre, the relief funds might attract larger contributions from companies based in their jurisdictions, enabling them to spend more money on social welfare and to finance relief efforts at times of natural calamities.

“The inclusion of contributions made to CM’s Relief Fund as one of the eligible activities under CSR will not only bring parity with the existing provision allowing CSR for PM’s National Relief Fund (PMNRF) but would also go a long way in helping poor and needy in the state to get support,” Banerjee wrote in a letter to the PM earlier this month. A copy of the letter was seen by HT.

As of Friday, the PMNRF had a balance of Rs2,875 crore.

CSR Rules came into effect on April 1, 2014, and require companies with a net worth of Rs500 crore or revenue of Rs1,000 crore or net profit of Rs5 crore to spend 2% of their average profit in the last three years on social development-related activities such as sanitation, education, healthcare and poverty alleviation, among others.

While many public sector companies directly take up projects to comply with the rules, many others prefer to deposit the money in the PMNRF to take advantage of the 100% tax incentive it offers, for the Centre to decide where and when to spend it.

The PMNRF was formed in 1948, when India’s first Prime Minister, Jawaharlal Nehru, set up the fund with public contributions to assist people displaced from Pakistan after Partition.

Money from the fund has been spent on people affected by natural calamities, major accidents and riots.

The PM also releases money from the fund for expensive medical treatment of the poor. The fund consists entirely of public contributions, without any budgetary support. The government invests the corpus of PMNRF with scheduled commercial banks.

Banerjee, who had earlier been at loggerheads with the Centre over deduction of interest on loans taken by the previous Left government, argued that her “chief minister’s relief fund is always under financial stress as not much contribution is made by the corporations”.

“Due to paucity of funds, we are not being able to fulfill all the requests made for support,” she wrote in the letter.

Abhirup Sarkar, an economist with the Kolkata-based Indian Statistical Institute, supported Banerjee’s argument. “It is always desirable that the corporate money is spent near the area where it is established. When the money goes to PMNRF, a company would not know where it is spent,” he said.