Comparative Analysis of New Schedule VII and Old Schedule VII

CSR provisions of new Companies Act have been notified and will become effective 1st April 2014. Thus all companies who qualify for CSR based on accounts of Mar’14 would be required to comply with CSR provisions. A company once qualifies for CSR would continue at the minimum for three years. CSR activities have been identified in Schedule VII.

Major change effected is that the Ministry had replaced the earlier Schedule VII (Refer http://blog.srr-foundation.org/?p=1505)   with a new one, which is more comprehensive and covers a number of additional issues omitted in earlier version. Given below is each clause of the new schedule VII alongwith comparative analysis with previous Schedule VII.

(i) eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation and making available safe drinking water;
  • Earlier version only covered extreme hunger.
  • Malnutrition was not specifically covered earlier, unless it could have been covered under then clause (iv) – reducing child mortality.
  • Preventive Health care is much broader than earlier version which only covered HIV/AIDS, Malaria and other diseases. Thus it now even covers activities relating to preventive health and not just curative.
  • Earlier version did not cover sanitation and safe drinking water specifically and was open to interpretations if such activities could have been covered under environmental sustainability.
(ii) promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects;
  • Now education includes special education for children, women and elderly thus seems to cover all non-formal education, adult literacy, etc.
  • A major boost for differently able. All form of education and vocational skills covered for them. However doubts linger on, if any other initiatives for such persons, support for institutions who are researching on such specific diseases, or institutions who research/ provide products to assist such persons, are covered. Only possibility could be the general clause of ‘promoting preventive health care’ under (1) above.
  • Employment enhancing vocation skills (which earlier was left as
    such thus giving scope for different interpretations) has now been expanded to cover children, women, elderly and differently-abled.
  • It also covers livelihood enhancement projects (thus various
    livelihood projects which was not certain earlier. One could interpret it to cover even microfinance projects.
(iii) promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;
  • This clause which earlier only covered promotion of gender equality
    and empowering women has been expanded to cover setting up homes and hostels for women and orphans.
  • One of the major criticism of the earlier version was that along with disability it did not Aged. The clause now specifically allows setting up old age homes day care centres and such other facilities for senior citizens.
  • It allows any measure to help reduce inequalities faced by socially and
    economically backward groups (read SC/ST) groups. However it is open to question whether it could include minorities which may be considered socially and economically backwards.
(iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water;
  • Earlier clause on ensuring environment sustainability has now been qualified to specify the type of projects likely to be covered under these activities. However the clause seems to cover a large number of areas, including maintaining quality of soil, air and water.
  • Following additional areas covered:
(v) protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts;
(vi) measures for the benefit of armed forces veterans, war widows and their dependents;
(vii) training to promote rural sports, nationally recognised sports, paralympic sports and Olympic sports;
(ix) contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government;
(x) rural development projects.

Following clause has been modified to exclude funds set-up by the State Govts. Original clause included similar funds set-up by the State Govt. Perhaps this is a reaction of the central Govt to demands made by various state govt. that the CSR funds should be transferred to various state govts.

(viii) contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;
  • A vague sounding social business projects has been omitted.

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