PSU firms spent bulk of CSR funds in Gujarat, UP, AP, Odisha, Chhattisgarh: CAG

Apex auditor Comptroller and Auditor General of India (CAG) has found the most of the central public sector enterprises (CPSEs) spent bulk of their Corporate Social Responsibility (CSR) funds in states like Gujarat, Uttar Pradesh, Chhattisgarh, Odisha and Andhra Pradesh.

Of CSR expenditure of 77 CPSEs under 24 Ministries that were reviewed for compliance with the provisions of the Companies Act, 2013, CSR Rules and Department of Public Enterprises Office Memorandums, very few concentrated on Punjab and north-eastern states like Mizoram, Manipur, Nagaland and Sikkim, CAG points out.

In the General Purpose Financial Report of CPSEs, Commercial, tabled in Parliament on Tuesday, CAG said that in the case of 26 CPSEs, Rs 66.6 crore of a total of Rs 75.61 crore CSR spend went towards salaries of CSR staff which was inadmissible.

While there was delay in the constitution of CSE committees in the case of 15 CPSEs, 13 Profit making CPSEs did not allocate the prescribed amount of CSR and 24 CPSEs had not defined the local area of their operations, it observed.

The CAG report also says that 11 out of 18 CPSEs audited failed to source 20 per cent of their total procurement requirements from micro and small enterprises as mandated by the government's public procurement policy.

Also, nine CPSEs in the list excluded significant quantum of their procurement while reporting compliance with the policy of purchasing specified percentage of goods and services from MSEs during 2015-16 and 2016-2017. There were also significant outstanding payables to MSEs in eight CPSEs though it was mandatory to make such payments within 45 days. While four CPSEs procured items designated for procurement from MSEs from non MSEs, 11 CPSEs followed the provisions of Purchase Preference Clause of the Policy benefitting a total of 5553 MSEs, CAG notes.

It observed that the practice of downgrading through deduction of marks while rating the CPSEs for non-achievement of targets by the administrative ministries, had not proved an effective deterrent against non-implementation of the policy.

Corporate governance was another area where CAG found significant departures by CPSEs from the prescribed guidelines. It said that representation of independent directors was inadequate in 37 CPSEs while there was no independent director on the Board of directors of 4 others. There was no woman director on the Board of Directors of 9 CPSEs.

There was no whistle blower mechanism in 3 CPSEs and the audit committees of 7 CPSEs did not review the whistle blower mechanism at all, CAG pointed out.

During 2016-17, the total investment in 406 government companies and corporations registered a net increase of Rs 40,992 crore. In the case of 173 governments controlled companies, the investment increased by Rs 4,320 crore, the audit report said.