At least 43.8 per cent listed Indian companies reported losses in Q1 of FY 2020-21 which is more than twice the number (20.33 per cent) of companies that reported losses for FY 2019-20. In fact, 19.65 per cent of Indian companies who were profitable in Q4 2019-20 reported losses in Q1 2020-21. As the latter corresponds to the period of the meteoric spread of the coronavirus from 2,280 cases on April 1 to 220,546 cases on June 30 in India, we can estimate that much of the loss was a direct economic consequence of the pandemic.
Covid-19 has evidently rubbed off on the economy and the losses suffered by India Inc. are likely to worsen. These losses also push down companies’ financial liability of contributing to Corporate Social Responsibility (CSR), ironically, at a time when private sector contribution to society is needed the most. The amendment notified in the Companies Act, 2013 requires companies with a net worth of Rs 5 billion or more, or an annual turnover of Rs 10 billion or more, or net profit of Rs 50 million or more, to spend 2 per cent of their average net profits of three years on CSR.
On the other hand, in 2021, the government will need the Indian private sector more than ever to contribute to vaccine distribution and post-Covid economic recovery, the dependence for which on CSR is unrealistic. Instead, we need to lean towards structuring more public-private partnerships for corporate contributions to society.
The year 2021 will be the year of the Covid-19 vaccine. It will be the topic of our greatest relief and utmost anxiety. Which vaccine? How to avail it? Will it work? What are the side effects? Procuring the vaccine would indeed be initially difficult but I don’t anticipate it to be our greatest challenge in the long run either.
India has a large vaccine production capacity. The Serum Institute of India is the largest vaccine manufacturer in the world and it is producing the AstraZeneca-Oxford vaccine and will also produce the Novavax vaccine. However, funding the programme will likely to be a challenge and a heavily debated one too. Should the vaccine be free for all beneficiaries or only for some? Will the government pay for vaccines for all? If not then who will?