Indian PSUs: Socially Responsible despite the Crisis

Public Sector Undertakings (PSUs) have played a critical role in discharging social obligations through CSR spendings - especially in the areas of education, health and skill development. This can be gauged from the fact that as of 6th April 2020, PSUs have already collectively committed more than Rs.2,500 crore towards the PM CARES Fund (Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund). Of this amount, Rs.925 crore have been committed by the Ministry of Power and the Ministry of New & Renewable Energy. The PM Cares Fund was created to enable citizens/companies to contribute to the Government’s healthcare, containment and relief efforts in the wake of the Covid-19 outbreak.

April 10 was marked as Public Sector Day as a tribute to Indian PSUs and their role in India's economic development. At the time of independence, PSUs were established as instruments of India's self-reliant economic growth. Since then, they have contributed immensely to the growth of the Indian economy in terms of manufacturing output, supply of essential commodities and services, employment as well as CSR activity.

In FY19, the CSR Expenditure of Central Public Sector Enterprises (CPSEs) stood at Rs.3,873 crore. This amount, collected from 150 CPSEs, was nearly 13% higher than the preceding year. What is commendable is the fact that these CPSEs collectively spent more than the prescribed 2% of the average Profit Before Tax (PBT) for 3 years. In fact, there were eight CPSEs which had reported negative average PBT in the past 3 years and yet incurred CSR expenditures during FY19. Watch out for Dun & Bradstreet's India's Top PSUs 2020 publication (visit https://www.dnb.co.in/events/PSU-Awards/) for deeper insights on this topic. The publication, now in its thirteenth year, serves as a ready-reckoner on the Indian PSU sector.

For another perspective on the significance of the CSR spend of Indian PSUs, we made a comparison with Corporate India. Dun & Bradstreet compiles a list of Top 500 Companies on a yearly basis (visit https://www.dnb.co.in/Events/Corporate-Awards/ for more details). These Top 500 Companies, which are listed on various stock exchanges, represent the leading companies in India's corporate sector. During FY19, the 500 companies featuring in the 2019 edition of the India's Top 500 Companies publication collectively spent a whopping Rs.11,067 crore on CSR activities.

Only 59 of these 500 companies belonged to the public sector and other government agencies. However, while these 59 companies accounted for just about 12% of the Top 500 companies in terms of numerical representation, they contributed to almost 28% of the aggregate CSR spend.

Considering the ongoing pandemic situation, FY20 and FY21 are likely to be challenging years for Indian business - small and large alike. However, PSUs are certain to uphold their CSR initiatives in spite of the uncertainty overshadowing the Indian economic landscape.