Tuesday, 16 February 2016

Swachh Bharath, CSR and Start Up

The Swachh Bharat Abhiyan or the “Clean India” campaign is also an opportunity for start-ups and Corporates.

The idea behind the movement is to gradually stop open defecation and control the diseases caused by it. It offers myriad opportunities for start-up business and for fulfilment of social responsibility objectives of corporates.

A majority of the Indian population has mobile phones but they do not have access to toilets – and that is a telling fact. Hygiene takes a back seat in rural as well as urban India, especially among the low income groups.

Here is how this campaign is an opportunity – the cost of constructing a toilet is estimated to be Rs. 20,000. Of this, the central government will subsidise Rs.4,000 and the State and local bodies will provide subsidy of Rs. 2,000 each.

That means the actual cost incurred by the individual is Rs. 12,000.
Construction start-ups who do not have heavy capital to invest can use this opportunity to start construction projects on smaller scale.

Funding can be obtained easily as overall costs are much less compared to standard construction projects and these provide a solid base for small start-ups to expand prudently without singeing their hands in large investment/capital heavy projects. This provides great opportunity to those who aspire to be entrepreneurs.

Corporates in India are duty bound to spend two per cent of their profits in social responsibility projects. This should be implemented under the Companies Act 2013. Section 135 of the Companies Act provides the threshold limit for applicability of the CSR to a Company i.e. (a) net worth of the company to be Rs 500 crore or more; (b) turnover of the company to be Rs. 1,000 crore or more; (c) net profit of the company to be Rs 5 crore or more.

Further as per the CSR Rules, the provisions of CSR are not only applicable to Indian companies, but also applicable to branch and project offices of a foreign company in India. Every qualifying company requires spending of at least two per cent of its average net profit for the immediately preceding three financial years on CSR activities.

From construction to fulfilling corporate social responsibility objectives, the Swachh Bharat Abhiyan is an opportunity.

While constructing toilets across India has gathered momentum, with nearly 95 lakh toilets being built in a year, usage levels are still low.

The north east seems to have done the best with usage being 100 per cent, but elsewhere toilet usage remains at   46 per cent to 50 per cent. Perhaps, it would be a good idea for corporates to also undertake hygiene education as part of CSR activities so that the effort of building toilets is not wasted.
India has long wilted under the scourge of public defecation.

It is a matter of shame on the world stage that a country of technology experts still has open defecation. The public and the private sector are now geared to meet this challenge and make India healthier and cleaner in every sense.

G. Karthikeyan
(The author is a Coimbatore-based chartered accountant)

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