‘Spend your CSR funds properly’ - Parliamentary Standing Committee to IRCTC - FACTLY
Sai Krishna Muthyanolla
February 21, 2017
The Parliamentary Standing Committee on Public Sector Undertakings advised IRCTC to spend its CSR funds properly, as per the guidelines issued by DPE, while appreciating its growth as a company.
Indian Railway Tourism and Catering Corporation Ltd. (IRCTC) is a Public Sector Undertaking (PSU) under the Ministry of Railways. It was established in 1999 as an extended arm of the Indian Railways to upgrade, professionalize and manage the catering and hospitality services at stations, on trains and other locations and to promote domestic and international tourism through development of budget hotels, special tour packages, information & commercial publicity and global reservation systems. In 2015-16, IRCTC clocked a revenue of Rs 1505 crore with a profit after tax of Rs 188.6 crore as per the report of the Parliamentary Standing Committee on Public Sector Undertakings.
As per the report, IRCTC earns revenues through the following core services
IRCTC’s revenue increased from Rs 953 crore in 2013-14 to Rs 1103 crore in 2014-15. It further increased to Rs 1505 crore in 2015-16. The revenues and profits from Internet Ticketing, Tourism & Packaged drinking water is continuously increasing while the catering business is making losses.
The internet ticketing on IRCTC began in 2002 with a mere 29 tickets booked on the first day. More than 13 lakh tickets were booked on 1st April, 2015. In 2014-15, 18.3 crore tickets were booked on IRCTC for 32.88 crore passengers. The service tax component of the internet booking was shared in the ratio of 80:20 between IRCTC and the Indian Railways till 2014-15. In 2015-16, the ratio was changed to 50:50. IRCTC also made a revenue of Rs 9.65 crore by air ticket booking in 2015-16.
The parliamentary standing committee was impressed with IRCTC’s growth in the areas of packaged drinking water, internet ticketing and Tourism. It recommended that the government provide enough land for establishing more drinking water plants. But, the committee expressed its concerns about the mounting losses in the catering business of IRCTC. Though IRCTC has transferred the core catering business to Indian Railways as per the catering policy of 2010, it has been incurring losses on the departmental catering business. IRCTC currently runs food plazas, and supports the e-catering facility. The committee in its recommendations suggested that IRCTC take adequate measures for the quality of food and safety of passengers since third party vendors are now allowed to serve their food through e-catering.
The standing committee noted that the CSR policy as approved by IRCTC board was not in conformity to the CSR Guidelines issued by the DPE. The committee noted that IRCTC was spending some of its CSR money on upgradation of passenger amenities and provision of infrastructure for passengers at railway stations. This, the committee reminded is the primary responsibility of the Ministry of Railways.
The committee noted that both the Ministry of Corporate Affairs and the Department of Public Enterprises (DPE) have time and again issued clarifications that expenses incurred by Companies for fulfillment of statutory obligations would not count as CSR expenditure. Hence inclusion of the welfare of customers, consumers, railway passengers and railway employees in their CSR Policy document is not in conformity of the CSR Guidelines issued by the Government.
As per the committee’s report, some of the CSR activities undertaken by IRCTC clearly do not qualify as per the guidelines issued by government. These activities relate to provision of amenities for passengers and should have been met from the regular budget of IRCTC or the Railways, but not the CSR allocation. The committee cited activities like provision of RO treated pure drinking water facility at NRCH, New Delhi in 2013-14 and carrying out sanitation work at Delhi Cantonment Railway Station in 2014-15.
The Committee also noted that the CSR spending of IRCTC has not been satisfactory for 2010-11, 2011-12 and 2014-15, further saying that unspent funds were not carried forward. While Rs 2.25 crore was allocated in 2010-11, only 5 lakh were spent by IRCTC. In 2011-12, only 45.37 lakh were spent by IRCTC against an allocation of Rs 1.82 crore.
The committee advised IRCTC to relook at its CSR Policy and revise it in line with the guidelines issued by DPE. The committee also recommended that IRCTC should not allocate CSR funds for any activities that are the primary responsibility of IRCTC or Indian Railways. Further, the committee suggested that the CSR funds allocated for a purpose and a particular year should be spent in the same year.