Controversial CSR norm for builders in Kerala

Controversial CSR norm for builders in Kerala

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The State Environmental Impact Assessment Authority (SEIAA) in Kerala has come out with a new condition for realtors which stipulates allocation of a portion of the project cost for corporate social responsibility (CSR) activities as a pre-condition to get environmental clearance (EC) for undertaking real estate projects. SEIAA wants the builders to allocate 2% of the total project cost for taking up welfare activities of the local community in consultation with the local body.

This condition is being universally applied for all real estate projects in Kerala state. SEIAA also wants applicants to utilise CSR amount before the completion of the project and an expenditure statement should be submitted to SEIAA along with the compliance report after getting certified by a chartered accountant. The builder is also required to submit a notarized affidavit for the commitment of CSR activities before issuance of environment clearance.

According to SEIAA a real estate project leaves some adverse impact on surroundings upon its completion which will impact the neighbouring locality and environment. Therefore, by asking the builder to cough up certain portion of the project cost on CSR, SEIAA is making sure that they make up for some of the negative impact.

However, realtors are not too happy with the new condition as it increases the cost of construction, that too when the sector is passing through one of the worst phases of slowdown. Further, realtors are worried that other states too may follow the suit unless the Kerala government reverses this new rule.  CREDAI (Kerala) has already expressed their dissent over the matter. Some also wonder whether SEIAA is acting within its limits by asking the builders to invest in CSR activities.