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Come the 18th of September, you'll find most newspapers and TV channels strutting to cover the impact of the <keyword id="19900043" type="General" weightage="20" keywordseo="Fed" source="keywords" meta.keywordsubtype="org" meta.entityname="Fed" meta.hostid="261" meta.entityid="Fed">Fed</keyword>'s potential rate change on Indian stock markets. Policymakers there have held the central bank's interest stable since July last year, within the range of 5.25% to 5.5%, to dash down inflationary pressures gripping the <keyword id="20335130" type="General" weightage="20" keywordseo="US-economy" source="keywords">US economy</keyword>. This much criticised wait-and-watch approach, after the <keyword id="19900043" type="General" weightage="20" keywordseo="Fed" source="keywords" meta.keywordsubtype="org" meta.entityname="Fed" meta.hostid="261" meta.entityid="Fed">Fed</keyword> held the rates stable in its most recent meeting in July, seems to be yielding some fruits now. US consumer price index (<keyword id="20468215" type="General" weightage="20" keywordseo="CPI" source="keywords">CPI</keyword>) slowed down to 2.5% in August, down from 2.9% in July. With inflationary pressures approaching the 2% target mandated by Fed, experts were hoping of a 50-basis point reduction in interest rates this time. However, employment data released by the US Bureau of Labor Statistics this month painted a less than rosy picture. Little has changed in August for unemployment rates and numbers, which stood at 4.2% and 7.1 million respectively. If anything, the numbers were elevated from year-ago period, when jobless rate was 3.8% and the number of unemployed people stood at 6.3 million. Experts now believe a 25-basis point reduction in interest rates is imminent, since some positive changes were seen on the employment front. The total number of nonfarm payroll employment jumped by 1,42,000 in August, but still stayed well below the average monthly gain of 2,02,000 Says Raj Patel, CMO at MintCFD, a trading platform, "A 25 bps could show muted results from the market, however, a major rate cut in the magnitude of 50 bps could generate negative reactions, since it might show that the Fed is signaling major concerns about the economic outbreak. Indicators such as the retail sales, consumer confidence index, and services PMI are on a positive note. The Fed is focusing more on employment as the average US unemployment rate over the last three months, up to July, has increased by 0.5% as compared to the lowest point in the past year". But why are <keyword id="19991358" type="General" weightage="20" keywordseo="Indian-markets" source="keywords">Indian markets</keyword> always so jittery about interest rate changes in the US? And should you be worried? We decode it for you. Rate hike and cuts impacts foreign investments Generally, large institutional investors borrow funds from the US and other developed economies, and invest in India, China and other emerging countries, anticipating economic growth, and hence, potential for increased returns in the times to come. This influx of funds is crucial for growing countries, since they use it to develop their infrastructure, which will in turn, bolster their economic growth. The cost of raising funds from countries like US is relatively cheaper, given the interest rates here are not very high. On the other hand, borrowing costs in emerging countries like India are higher. At present, India's repo, or borrowing rate, at which banks borrow funds from <keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>, stands at 6.5%. While this may seem like a trivial difference, it decides the fate of trillions of dollars of investments. Even a 25-basis point hike or cut could bring about a significant difference when such huge sums are involved. So, when Fed decides to hold the interest rate stable, or hike the same, it makes borrowing to invest in international markets expensive for investors. At the same time, it makes investing in US treasury bonds more lucrative and economically favorable, since investors are set to earn higher returns from them. As a result, investors rush to withdraw their money from other economies, and invest it in their own country i.e. the US. For instance, in January 2024, Fed decides to keep the interest rate stable between the range of 5.25% to 5.5%. As a result, <keyword id="19991358" type="General" weightage="20" keywordseo="Indian-markets" source="keywords">Indian markets</keyword> saw an outflux of foreign investment that month, with investors withdrawing Rs 6,593 crores from markets. Between March 2022 and July 2023, the Fed hiked interest rates about 11 times. As a result, during FY23, foreign investors remained net sellers, liquidating Rs 40,936 crore from Indian markets. When Fed decides to slash rates, which makes borrowing cheaper, investors are encouraged to raise more funds, and invest more heavily in developing countries. This anticipation of funds stimulate the stock markets in a positive manner, which is why it is beneficial situation for countries like India, which, eventually, see greater investments from US and other economies. China and India are generally seen as favorite destinations for investors. With the Chinese economy in doldrums at the moment, India can expect higher foreign direct investments (FDI) in the months to come. Just yesterday, China cut down interest rates on about $5 trillion worth of its outstanding loans, in a bid to spur consumption and borrowing in the economy. But do not expect any immediate boosts in the equity market, as many experts caution. There have been many instances in the past where rate cuts did not boost equities immediately. This is because rate cuts are not the sole factor driving investments. If the corporates report slowed earnings, or weak growth, investors are bound to be discouraged from investing in the country. Your best bet is to invest in sectors which have traditionally withstood market downturns, like insurance, telecoms and pharmaceuticals, and reduce exposure to sectors which are significantly affected by market cycles (think PSUs, auto, metals etc).

With Fed rate cuts imminent, what can you expect from the Indian markets next week?

<ul><li>The Companies Amendment Bill was approved by the Cabinet, said that any amount left unspent should be transferred to a special account called the ‘Unspent Corporate Social Responsibility Account’. </li><li>Government will be taking over the money they are asked to spend, and transferred to its own fund. </li><li>Indian companies are known to spend as much as ₹15,000 crore<a href="https://www.livemint.com/companies/news/companies-will-have-to-pay-unused-csr-money-into-state-corpus/amp-1563381925491.html?__twitter_impression=true"> annually on</a> corporate social responsibility. </li></ul> It is common for most companies to miss out on fulfilling the government mandate to spend a certain amount of funds on social activities. And, soon government will be taking over the money they are asked to spend, and transfer to its own fund, as per the amendments to the <keyword id="1850989" type="PERSON" weightage="20" keywordseo="Companies-Act-2013">Companies Act 2013</keyword>, approved by the Cabinet. Most companies, <a href="https://thewire.in/business/one-in-three-bse-100-firms-falls-short-in-mandatory-csr-spending">including publicly listed </a>companies take the 2013 mandate of the government casually. As per the norm, companies with a net profit of over ₹5 crore or revenues of ₹1,000 crore or net worth of ₹500 crore; should spend 2% on their profits on corporate social responsibility (CSR). Six years on, few companies take it seriously though most top companies like Reliance Industries, L&amp;T and all public sector companies do take the efforts to ensure money flows to the right causes. Those who spend regularly tend to focus on education, rural development and healthcare. The Companies Bill amendments say that any amount left unspent should be transferred to a special account called the ‘Unspent Corporate Social Responsibility Account’. “Such amount shall be spent by the company in pursuance of its Corporate Social Responsibility Policy within a period of three financial years from the date of such transfer,” the draft amendment said. Indian companies are known to spend as much as ₹15,000 crore<a href="https://www.livemint.com/companies/news/companies-will-have-to-pay-unused-csr-money-into-state-corpus/amp-1563381925491.html?__twitter_impression=true"> annually on</a> corporate social responsibility.

Indian companies will have to hand over the unspent money in the social responsibility fund to the government

Pune, <keyword id="19897354" type="General" weightage="20" keywordseo="bajaj-auto" source="keywords">Bajaj Auto</keyword> is developing a portfolio of clean fuel CNG motorcycles, and the first such bike will hit the market in June, Bajaj Auto Managing Director Rajiv Bajaj said here on Friday. The bike will run on CNG and would hit the roads in June, he said while announcing <keyword id="20201280" type="General" weightage="20" keywordseo="bajaj-group" source="keywords">Bajaj Group</keyword>'s commitment of Rs 5,000 crore towards <keyword id="19916939" type="General" weightage="20" keywordseo="corporate-social-responsibility" source="keywords">Corporate Social Responsibility</keyword> (CSR) spent over the next 5 years. The new bike would target mileage-conscious consumers and is expected to launch under a different brand. It is expected that CNG bikes will be priced higher than their petrol counterparts due to the higher cost of manufacturing besides having a special tank to offer petrol and CNG fuel options to offer convenience to customers. Bjaja also said that <keyword id="20050188" type="General" weightage="20" keywordseo="pulsar" source="keywords">Pulsar</keyword> launched 20 years ago will hit 2 million units soon. Meanwhile, the Bajaj Group committed Rs 5,000 crore to social impact initiatives over 5 years, with a focus on skill development, under 'Bajaj Beyond'' the Group's new identity for all its CSR and charitable programmes. This will benefit over 2 crore of tomorrow's youth and enable them to take advantage of the employment and entrepreneurial opportunities offered by India's growing economy. "Social responsibility is deeply entwined in the <keyword id="21052740" type="General" weightage="20" keywordseo="bajaj-family" source="keywords">Bajaj Family</keyword>'s businesses and its philanthropic endeavours through generations. In the last 10 years alone, the Bajaj Group has contributed close to Rs 4,000 crore towards CSR initiatives largely focused on skilling and education, health, livelihood, water conservation, and several other areas of development," Bajaj Auto Chairman Niraj Bajaj said. The Bajaj Group's humanitarian efforts are channeled through several institutions. The <keyword id="21051165" type="General" weightage="20" keywordseo="jamnalal-bajaj-foundation" source="keywords">Jamnalal Bajaj Foundation</keyword>, Jankidevi Bajaj Gram Vikas Sanstha, and the <keyword id="21052739" type="General" weightage="20" keywordseo="kamalnayan-bajaj-hospital" source="keywords">Kamalnayan Bajaj Hospital</keyword>, among others, have worked unceasingly to uplift and empower communities, he said. The Group stays firmly committed to co-creating a thriving and inclusive future for all Indians, he added. Bajaj Group companies include Bajaj Auto, Bajaj Finserv, Bajaj Electricals, and Mukand Ltd. "Launching the Bajaj Engineering Skills Training (<keyword id="19925221" type="General" weightage="20" keywordseo="best" source="keywords">BEST</keyword>) last year has been a valuable learning experience for us. It gave us a very clear picture of the critical gap between theoretical education and practical skills needed in the manufacturing industry. The insights gained through BEST acted as a cornerstone in laying down the groundwork. With Bajaj Beyond, we will expand our skilling efforts across the group," Rajiv Bajaj said. "You do not change the world by sloganeering. Saying Make in India does not change the world; saying Aatmanirbhar does not change the world; saying vocal for local does not change the world; saying Viksit bharat does not change the world. "Words would not change the world, unless you have the skills to put those words into action. It would certainly not change the world by saying I will spend tens of thousand of crores of rupees on CSR or that I want to touch billions of lives," he added. Speaking at the event Sanjiv Bajaj, Chairman &amp; Managing Director, Bajaj Finserv, said, "Skilling has been at the heart of our social impact initiatives and we have seen the positive multiplier effect it has on the well-being of youth and their families. Our Certificate Programme in Banking, Finance and Insurance (CPBFI) prepares youth for employment in the fast-expanding financial services sector which is currently seeing a shortage of talent." With Bajaj Beyond, Bjajaj Finserv commits to strengthening India's skilling ecosystem, especially in the hinterland, enabling greater access to economic prosperity, he added.

Bajaj Auto working on CNG bike, to hit road in June: MD

Mumbai, Apr 7 () A section of India Inc on Tuesday appealed all corporate social responsibility initiatives to unite and focus efforts towards protecting the vulnerable sections of the society from the COVID-19 pandemic.IT services major Wipro's chairman Rishad Premji, Edelweiss Foundation's -- the CSR arm of financial services major -- Vidya Shah and Rohini Nilekani of Arghyam have come together and joined hands with global non-profit Oxfam in making the appeal.Th appealed to CSR foundations, funding and philanthropic organisations to focus efforts in protecting the elderly, the sick, the physically challenged, the poor and informal sector, migrant workers, a statement said.A slew of corporates have made announcements of giving and committing money to the newly-created PM-CARES Fund as the number of positive cases in India increased and the government appealed for voluntary contributions.The four entities called on large donors to "pledge for providing more effective support to and strengthening of their civil society partners by introducing flexibilities and undertaking measures in their grant-making and monitoring mechanisms" in the immediate term.The "flexibility" measures include making new grants as unrestricted as possible, so non-profit partners have maximum flexibility to respond to this crisis.Oxfam's chief executive Amitabh Behar said this is precisely the kind of action needed from big names of Indian industry, philanthropies and foundations for the long-term battle against COVID-19 and its economic and social consequences. AA MR

Corporates appeal to unite CSR efforts to protect vulnerable from COVID

<ul><li>Finance Minister <keyword id="129243" type="PERSON" weightage="20" keywordseo="Nirmala-Sitharaman">Nirmala Sitharaman</keyword> has announced that corporates can now spend 2% of their CSR on government initiatives like PSU incubators as well as public funded education entities including IITs. </li><li>She had earlier said that 80 livelihood business incubators and 20 technology business incubators will be set up in 2019-2020. </li><li>The <keyword id="8124812" type="UNKNOWN" weightage="20" keywordseo="state-run-incubators">state run incubators</keyword> in India include the likes Techno Hub, Rajasthan, T-Hub Hyderabad from the Telangana government, Kerala Startup Mission among others.</li></ul>The Indian government has announced that corporates can now spend 2% of their CSR spending on government initiatives like PSU incubators as well as public funded education entities including IITs. The state run incubators in India include the likes Techno Hub, Rajasthan, T-Hub Hyderabad from the Telangana government, Kerala Startup Mission among others. The Indian government has had a positive attitude to increase incubation centres in the country. During the budget announcement in July, Finance Minister Nirmala Sitharaman had said that 80 livelihood business incubators and 20 technology business incubators will be set up in 2019-2020 to encourage and develop 75,000 social entrepreneurs in India. This will come as a big boon to the Indian startup ecosystem which has been talking about the need of more government initiatives to push forward incubation which will result in the spur of startups. Including the CSR spend towards incubation, will also encourage the corporates who have already been actively involved with startups through partnered accelerator programs, incubation as well as acquisition of startups. Apoorv Sharma, co-founder &amp; president, Venture Catalysts, in an earlier interview with Business Insider had put forth the same point to say it will be a vital factor in increasing India’s ranking in the global startup ecosystem. However, Sharma believes that in India, private incubators too need to be given incentives. He cites the example of the US and China, where successful incubators and accelerators are the private ones. Sitharaman announced a slew of initiatives that has the markets rejoicing – corporate tax has been slashed. A domestic company can pay income tax at 22% if they don’t seek any exemption or incentives and there will be an Effective Tax Rate of 25.17% inclusive of all surcharges and cess for such domestic companies.

India offers a big incentive for Indian startups as well as industries to invest in the future

Mumbai, Jan 22 () Philanthropy arms of top corporates, including the Tatas, Mahindras, Godrejs and Premjis, on Wednesday announced a partnership to minimise the climate change impact.
 The India Climate Collaborative (ICC) will be working to strengthen the climate community locally, build a climate narrative and drive solutions that will ensure both the natural world and people thrive.
 The announcement comes amid an increased conversation on climate change, with the 50th session of the World Economic Forum in Davos generating the maximum flutter, which has also seen US President Donald Trump calling the greens "prophets of doom".
 "Our collective leadership through the ICC will indicate to the world that Indian philanthropy is ready to be a leader in climate action," Tata Trusts Chairman Ratan Tata said in a statement.
 The ICC seeks to build a collaborative platform for diverse voices, innovative solutions, and collective investments, the statement said, without quantifying the money which the corporates are pooling together for the platform.
 Vidya Shah of financial services firm Edelweiss' corporate social arm, Rohini Nilekani of Infosys' CSR arm and banker Harmendra Kothari are among the other names in the 40-member collective.
 "It is clear that the world cannot continue to pursue a business-as-usual approach and nobody can solve the problem on their own. Business, government, and philanthropy must collaborate within and among themselves to drive results quickly and at scale," Mahindra Group Chairman Anand Mahindra was quoted as saying.
 "Together we will find solutions that will make climate action effective and impactful," he added.
 Nadir Godrej, the managing director of Godrej Indistries, said businesses can do a lot for the planet in a cost effective way.
 "We have to look at localised solutions that can solve global problems, and this will need businesses, governments, academia, and individuals to work together to identify and scale up solutions. The role of philanthropy will be to augment these efforts," he said.
 Others who have joined the initiative include Swades Foundation, Sanctuary Asia Foundation, Mongabay-India, Indian Development Review (IDR), People's Archive for Rural India (PARI), Climate Collective Foundation, SELCO, and the Foundation for Ecological Security (FES).
 Shloka Nath, who leads the sustainability portfolio at Tata Trusts, has been appointed the Executive Director of the India Climate Collaborative, the statement added. AA ABM
ABM

Top Indian cos' CSR arms join forces to combat climate change

Vidya Shah, the ex-CFO of Edelweiss Financial Services, remembers writing many donation cheques to several NGOs as part of the <keyword id="6354502" type="ORGANIZATION" weightage="100" keywordseo="CSR">CSR</keyword> initiatives of the company. However, it was only after she decided to set up the EdelGive Foundation that she visited these NGOs, only to come across the eye-opening reality. 
 
"Even the largest NGOs were struggling. They couldn't plan beyond six months because they were not sure they would be able to raise funds. And they had no process to measure the work they were doing," Vidya told ET. 
 
After deciding to help these NGOs build capabilities, Edelgive now operates on an annual budget of Rs 25 crore. However, Vidya admits that when the budget was much lower in the initial phases, administrative costs were kept low by limiting the Foundation's staff strength. 
 
Indian companies are increasingly expanding the scope of their CSR activities, hinting at a happy place between the social and corporate sectors. While on one hand, business executives are joining NGOs, social workers too are receiving lucrative offers from corporate houses. 
 
The Ministry of Company Affairs has fixed the annual CSR spends in the coming years at Rs 20,000 crore. 
 
This has resulted in an increase in the demand of individuals who can handle the CSR initiatives of companies, and since NGOs pay quite less because of budget constraints, salary hikes in corporate profiles can go as much as 40% higher. 
 
To make the rising importance of CSR clearer, CSR heads once used to report to corporate affairs or human resources (HR), but nowadays, they report directly to a board of trustees or the global CSR head. 
 
The rise in demand has given birth to dedicated headhunting firms that help corporates in their search for talented CSR individuals. Third Sector Partners, one such firm, placed 65 senior level CSR professionals in the last financial year. 
 
"Most of them want someone from the development sector, with grassroots experience, but that really limits the choice. We persuade them to be open to crossover candidates from the corporate sector, especially from banking. They're usually willing to take salary cuts in order to join the social sector," Managing partner Poulomee Ghosh told ET. 
 
<a href="http://i.huffpost.com/gen/1554237/images/o-CORPORATE-SOCIAL-RESPONSIBILITY-facebook.jpg">Image source</a>

Indian companies are expanding their CSR initiatives and this
could land you a high-paying job

<ul><li>The Indian government recently issued new guidelines for <keyword id="50285" type="General" weightage="50" keywordseo="vpn-service" source="Orion">VPN service</keyword> providers in the country.</li><li>The government is expected to release a new FAQ document to answer some of the questions raised in the country.</li><li>The government is expected to exempt corporate VPNs from the new guidelines.</li></ul>The Indian government recently released guidelines for companies offering virtual private network (<keyword id="201519" type="General" weightage="100" keywordseo="vpn" source="Orion">VPN</keyword>) services in the country, directing them to record and store the details of their users. The <a href="https://www.businessinsider.in/business/telecom/news/what-is-the-impact-of-new-vpn-guidelines-on-users-and-vpn-providers/articleshow/91468069.cms">directive</a> was issued by the Indian Computer Emergency Response Team (CERT-In), the country’s cyber watchdog. According to a report by <a href="https://economictimes.indiatimes.com/tech/technology/corporate-vpns-neednt-maintain-logs-of-customers-cert-in/articleshow/91524674.cms">Economic Times</a>, CERT-In is expected to soon issue an FAQ document answering some of the doubts raised by users and companies. <cmsannotation type="cmsannotation" annotationid="Relief to corporates and employees in the country" comment="subhead" text="Relief to corporates and employees in the country">Relief to corporates and employees in the country</cmsannotation> In a major relief to corporates and employees in the country, the new directive will reportedly not be applicable to enterprise and corporate VPNs. According to the report, the document will reveal that the new guidelines are applicable only to those VPN service providers that offer their VPN services to the general public. Since the pandemic began, several companies have offered a work from home option to several of their employees. However, employees are required to use a VPN to connect to the corporate network. The new guidelines will reportedly exclude such VPNs so that employees are able to connect to VPNs without any issues. <cmsannotation type="cmsannotation" annotationid="Only commercial VPN providers to maintain user data" comment="subhead" text="Only commercial VPN providers to maintain user data">Only commercial VPN providers to maintain user data</cmsannotation> According to the report, the new guidelines that mandate the VPN service providers to maintain user data are applicable only to commercial VPN providers that offer their services to the general public. “For the purpose of this direction, VPN Service provider refers to an entity that provides “Internet proxy like services” through the use of VPN technologies, standard or proprietary, to general Internet subscribers/users,” CERT-In states in its document accessed by ET. <cmsannotation type="cmsannotation" annotationid="VPN companies may exit India" comment="subhead" text="VPN companies may exit India">VPN companies may exit India</cmsannotation> Anonymity is one of the most important parts of VPNs and the new guidelines completely remove anonymity from this as CERT-In can at any time ask these service providers to furnish user data such as name, address, phone number, email and more. NordVPN has already <a href="https://www.businessinsider.in/business/telecom/news/what-is-the-impact-of-new-vpn-guidelines-on-users-and-vpn-providers/articleshow/91468069.cms">expressed its reservations against the new bill</a>, saying it is committed to protecting customer privacy and is willing to remove its servers from the country if there are no other options. NordVPN isn’t the only company considering exiting the market. “PureVPN is a no-log VPN, user anonymity and security is a central priority but if that is compromised by this policy then we will have to consider our position in India,” Uzair Gadit, chief executive officer of PureVPN told Business Insider India in a statement. The FAQ document from CERT-In will clarify doubts about the new VPN guidelines. SEE ALSO: <a href="https://www.businessinsider.in/business/telecom/news/what-is-the-impact-of-new-vpn-guidelines-on-users-and-vpn-providers/articleshow/91468069.cms">Indian government's VPN guidelines will impact over 270 million users as VPN providers have no option but to leave the country</a> <a href="https://www.businessinsider.in/business/telecom/news/reliance-jio-is-working-on-improving-call-quality-by-integrating-5g-vonr-and-4g-volte/articleshow/91442195.cms">Reliance Jio is working on improving call quality by integrating 5G VoNR and 4G VoLTE</a> <a href="https://www.businessinsider.in/business/telecom/news/reliance-jio-results-q4-fy22-profit-revenue-subscriber-growth/articleshow/91374478.cms">Reliance Jio reports its strongest profit growth in five quarters as it offloads millions of low quality subscribers</a>

Corporate VPNs will reportedly not be affected by the new VPN guidelines in India

<ul><li><keyword id="129243" type="PERSON" weightage="20" keywordseo="Nirmala-Sitharaman">Nirmala Sitharaman</keyword>'s budget said that it would increase the number of free-floating shares, the ones that are available to public including foreign portfolio investors.</li><li>The budget proposal said that amount of mandatory free float will be increased to 35% of all shares of a company from the current 25%.</li><li>This would mean promoters of companies will have to sell shares worth ₹3.7 trillion, according to Credit Suisse's Neelkanth Mishra.</li><li>Such high quantities of shares on sale will drive down stock prices before they stabilise. </li></ul> Nirmala Sitharaman's latest budget said that it would increase the number of free-floating shares, the ones that are available to public including foreign portfolio investors. The budget proposal said that amount of mandatory free float will be increased to 35% of all shares of a company from the current 25%. This would mean promoters of companies will have to sell shares worth ₹3.7 trillion, according to Neelkanth Mishra, co-head of Asia Pacific strategy at global investment bank Credit Suisse. "This transition may cause some volatility in the equity markets — nearly Rs 3.7 trillion of equity would need to be sold by promoters — but a reasonable time-frame to reach this threshold should minimise that," <a href="https://indianexpress.com/article/opinion/columns/opening-a-window-fiscal-deficit-target-union-budget-2019-5819761/" data-type="tilCustomLink" target="_blank">he said in a opinion piece</a>. Some of the fear is already visible in the market. Sensex lost nearly 400 points on Friday after the budget was revealed. The first hour of trade on Monday saw deeper cuts on the benchmark index. While a number of factors are at play, the market seems to be wary of the short term impact of the various budget provisions. The upside The government's move to increase the free float is aimed at getting more foreign investors into India. "The theoretical maximum that foreigners can buy affects the weight a country has. The “Foreign Inclusion Factor” for India, which is amongst the lowest in the world, should increase meaningfully once this change is implemented. A higher weight in the benchmarks means greater equity portfolio flows to the country," Mishra explained. Assets of foreign portfolio investors-- those investing in shares and bonds-- <a href="https://www.thehindubusinessline.com/opinion/columns/quality-of-fpi-inflows-is-improving/article28273906.ece" data-type="tilCustomLink" target="_blank">increased by over </a>₹3 trillion between February and May 2019. Word of caution However, India has to wary not to overheat the market with fleeting foreign capital. When a strong gush of dollars enter any country, it leads to higher inflation. Similarly, the hot money tends to leave the country at the first sign of any trouble, leading to a huge crash. SEE ALSO: <a href="https://www.businessinsider.in/kotak-mahindra-bank-share-price-top-losers-on-the-nifty-after-rbi-fine-on-uday-kotak/articleshow/69721330.cms" data-type="tilCustomLink" target="_blank">Kotak Mahindra Bank has lost nearly half a billion dollars in market cap after the billionaire promoter was fined by the RBI</a>

Owners of Indian companies may have to sell ₹3.7 trillion worth shares to meet the budget mandate-- and that may drive down stocks rapidly

<ul><li>The CII analysed the annual reports of 1,522 companies and determined that ₹89 billion worth of funds were disbursed for the purposes of <keyword id="6354502" type="ORGANIZATION" weightage="20" keywordseo="CSR">CSR</keyword> in fiscal 2017. </li><li><keyword id="6355445" type="UNKNOWN" weightage="20" keywordseo="education">Education</keyword> and <keyword id="6354525" type="UNKNOWN" weightage="20" keywordseo="healthcare">healthcare</keyword> accounted for a bulk of the spending, with nearly 33.5% of funds going towards education and skill development programs, while 25.2% of funds were allocated to health and sanitation projects. </li><li>The report found that 420 companies did not meet the 2% spending requirement.</li></ul>A report released by the Confederation of Indian Industry (CII), last week, shows that the expenditure by Indian companies on <keyword id="113603" type="ORGANIZATION" weightage="20" keywordseo="corporate-social-responsibility">corporate social responsibility</keyword> (CSR) increased by 9% in fiscal 2017, despite a slowdown in earnings growth. This marked a decline from fiscal 2016, when CSR spending was 27% higher as more companies started following the law in its second year of implementation. The CII’s Annual CSR Tracker analysed the annual reports of 1,522 companies that are traded on the Bombay Stock Exchange and determined that ₹89 billion worth of funds were disbursed for the purposes of CSR. This equates to 92% of the amount that should have been spent based on these companies’ cumulative profits. This is a significant improvement from fiscal 2015, when only 80% of CSR funds were spent. Education and healthcare accounted for a bulk of the spending, with nearly 33.5% of funds going towards education and skill development programs, while 25.2% of funds were allocated to health and sanitation projects. In fact, 75% of all companies assessed in the report invested in education and skill development. Further down the list, 11.2% of the funds were spent on rural development, while 9.7% was spent on environmental preservation activities. India is one of the few countries in the world that mandates a minimum spending requirement for CSR activities. Under Section 135 of the Companies Act, which was enforced on April 1st, 2014, a company has to allocate 2% of its average annual net profit in the preceding three years to CSR. However, the policy only applies to companies of a certain size - those with a net worth of ₹5 billion or more, those with an annual turnover of ₹10 billion or more or those with an annual net profit of at least ₹50 million. The CII was only able to assess the companies that published their annual reports by early December 2017. As a result, around 80 other companies, including India’s public sector banks, on the <keyword id="35140" type="CITY" weightage="20" keywordseo="BSE">BSE</keyword> were left out. Public-sector banks, which are governed by the RBI, are exempt from the requirement since their actions don’t fall under the purview of the Companies Act. Rather unsurprisingly, the tracker showed that a bulk of the total amount spent on CSR came from a few large firms. While 49 public-sector enterprises accounted for 28% of all the funds spent (₹24.9 billion), almost 90% of this figure came from 13 firms. Meanwhile, 50% of the total funds spent by the private sector (₹64.1 billion) was accounted for by 16 firms. Here are some other key findings from the report:- <ul><li>Sports development and national heritage are fast-rising segments: The report showed that the funds allocated towards sports development activities surged 192% to ₹1.7 billion, while spending on the preservation of national monuments and gender equality projects went up by 153% and 115% to ₹2 billion and ₹2.4 billion, respectively. More notably, among the larger segments, CSR funds for environmental activities went up by 66% to ₹8.6 billion.</li><li>Few takers for slum development and the Prime Minister’s Relief Fund: Less than ₹10 million was invested in slum development while 45 companies allocated a cumulative total of only ₹230 million to the Prime Minister’s Relief Fund. The fund received four times as many contributions in fiscal 2016.</li><li>As a state, Maharashtra was the most popular CSR destination: Almost 40% of the companies analysed invested in CSR projects in Maharashtra, India’s richest state. Gujarat,Tamil Nadu and Karnataka also proved to be popular draws, with 23%, 19.9% and 19.4% of companies allocating CSR funds to these states. Only 135 companies had CSR projects all over India. Unfortunately, very few companies invested in projects in the the Northeast of India. </li><li>Energy and software companies proved to be the major contributors: An industry-wise breakdown showed that oil and gas companies accounted for 19.4% of total CSR funds spent, or ₹17.2 billion, in 2016-17, while software and services firms contributed 12.2%. Rounding up the top five were metals and mining, with 7.4%, the banking sector, with 7.33%, and automobile industry, with 6.3%.</li></ul> The CII noted that companies were beginning to disclose information regarding the impact of their CSR activities, something that is not currently mandated under the existing law. In fiscal 2017, 189 of the 1,522 companies assessed disclosed the results of their activities. In the education and skill development segment, 35,129 school structures and facilities were built or renovated, based on the reports of 161 companies, and more than 4 million people directly benefited from such activities. In the health and sanitation segment, data from 135 companies showed that 169,041 infrastructures (toilets, health camps, drinking water facilities, mobile vans, hospitals) were created or upgraded, which impacted the lives of 14.3 million people. On a more sobering note, the report found that 420 companies did not meet the 2% spending requirement. While 118 companies said that they “did not find the right project”, 95 companies did not mention a reason while 58 said that they required more to time to plan. While the CII report highlights the progress made by companies in increasing their CSR spending ever since the law took effect, there still remains a lot more work to be done in terms of compliance and demonstrating the effectiveness of such spending. In order to make sure that there are less violations of the CSR law, the Ministry of Corporate Affairs is setting up <a href="https://timesofindia.indiatimes.com/business/india-business/govt-appointed-panel-to-review-csr-enforcement-under-companies-law/articleshow/63699792.cms">a 12-member committee</a> to assess and improve the enforcement of its provisions. The panel will also formulate a mechanism for monitoring the CSR activities of companies and sanctioning the ones that do not fulfill their spending requirements. While this is a step in the right direction, it’s hard to see why the government has waited four years after the implementation of the law to do this.

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