Corporate Social Responsibility (CSR) in India has evolved, with companies now mandated to allocate profits to social causes. In 2014, India became the first country to legally mandate CSR spending under Section 135 of the Companies Act, 2013. This requires businesses exceeding specific financial criteria to allocate 2% of their average net profits to CSR initiatives.
Since then, CSR funding has flowed into sectors like education, healthcare, rural development, and environmental sustainability, affecting India’s socio-economic structure.
Let's examine CSR's evolution in India, current sector-wise allocation trends, and future difficulties.
The Evolution of CSR in India
Indian businesses have a history of philanthropy, but formal CSR gained prominence with the 2013 law. The legislation aimed to encourage more structured and impactful social responsibility from businesses. As companies adapted, sectors like education, healthcare, and environmental sustainability became major recipients of CSR funds.
For businesses, CSR is both a legal obligation and a method for cultivating a socially-conscious brand image and contributing to national progress. The effectiveness of these initiatives depends on how and where funds are allocated.
Types of Corporate Social Initiatives
CSR includes diverse initiatives:
- Corporate Philanthropy: Donations to charitable organizations, usually through a corporate foundation.
- Community Volunteering: Employee volunteering for community service, building a culture of giving.
- Socially-Responsible Business Practices: Aligning business models with ethical criteria to prevent social or environmental damage. This can include eco-friendly products or fair trade practices.
- Cause Promotions and Activism: Funding campaigns or participating in advocacy for specific issues like gender equality or environmental protection.
- Cause-Based Marketing: Donating a percentage of profits from certain products/services to a linked charitable cause.
- Corporate Social Marketing: Investing in public behavior change campaigns for social good, such as promoting public health or environmental awareness. These are usually large scale, long term efforts.
Eligible Sectors for CSR Activities
CSR activities cover a broad range:
- Eradication of Hunger and Poverty: Programs targeting hunger and poverty reduction, especially in disadvantaged communities.
- Promotion of Education and Gender Equality: Initiatives for education, including infrastructure and scholarships. Gender equality programs are also prominent.
- Healthcare: Health camps and awareness campaigns combatting diseases like HIV/AIDS and tuberculosis.
- Environmental Sustainability: Investments in afforestation, water preservation, and waste management.
- Relief Funds: Contributions to government relief funds, like PM CARES and PM Relief Fund, supporting disaster relief and socio-economic advancement.
1. Education, Differently abled, Livelihood
Education, Differently Abled, Livelihood: Education remains the top-funded sector (44% of total expenditure). Corporates invest in infrastructure, teacher training, digital learning, and scholarships. Connect with Protean to explore CSR solutions.
- CSR Spending on Education (FY 2022-2023): ₹13,209 crore
- Key Initiatives: Digital literacy, skill development programs, and infrastructure development.
2. Healthcare and Sanitation
Healthcare and Sanitation: Healthcare (29% of funding) focuses on hospitals, health camps, sanitation, and clean water access, particularly vital after the COVID-19 pandemic.
- CSR Spending on Healthcare and Sanitation (FY 2022-2023): ₹8,739 crore
- Key Initiatives: Building healthcare facilities, sanitation programs, and promoting preventive healthcare.
3. Rural Development
Targeting poverty reduction and inclusive growth (7% of funding), this sector focuses on infrastructure, essential services access, and sustainable agriculture, often working with existing government schemes.
- CSR Spending on Rural Development (FY 2022-2023): ₹2,005 crore
- Key Initiatives: Providing clean drinking water, improving rural infrastructure, and promoting sustainable livelihoods.
4. Environmemt, Animal Welfare and Conservation of Resources
Growing in importance (10% of spending), this sector includes sustainability projects like water preservation, renewable energy, afforestation, waste management, and animal welfare. Consider partnering with Protean to integrate technology into your efforts and enhance your impact. Explore our sustainability solutions here.
- CSR Spending on Environment (FY 2022-2023): ₹2,921 crore
- Key Initiatives: Afforestation, waste management, water conservation, and carbon footprint reduction.
5. Gender Equality, Women Empowerment, Old Age Homes, Reducing Inequalities (GWOR)
With a strong focus on gender equality, corporates are funding programs that promote women’s education, skill development, and financial independence. Initiatives for elderly care, including old age homes, are also part of this sector, addressing the needs of vulnerable populations.
- CSR Spending on GWOR (FY 2022-2023): ₹893 crore
- Key Initiatives: Women empowerment programs, old age homes, gender equality advocacy.
6. Encouraging Sports
Corporates are increasingly recognizing the role of sports in fostering discipline, teamwork, and leadership skills. CSR funds are being used to build sports infrastructure, support young athletes, and promote sporting activities, especially at the grassroots level.
- CSR Spending on Sports (FY 2022-2023): ₹526 crore
- Key Initiatives: Development of sports infrastructure, talent development programs, grassroots sports promotion.
7. Heritage Art & Culture
Preserving India’s rich cultural heritage is an emerging focus area in CSR. Companies are investing in restoring heritage sites, promoting traditional arts, and supporting local artisans.
- CSR Spending on Heritage Art & Culture (FY 2022-2023): ₹441 crore
- Key Initiatives: Restoration of heritage sites, support for traditional arts, cultural preservation programs.
8. Prime Minister’s National Relief Fund
The Prime Minister's National Relief Fund (PMNRF) and other government relief funds have received substantial contributions from corporates, particularly in times of disaster or national emergencies. These funds are used for relief efforts and rehabilitation work for people affected by calamities.
- CSR Spending on PMNRF (FY 2022-2023): ₹815 crore
- Key Initiatives: Disaster relief, rehabilitation efforts, contribution to national emergencies.
Geographic Distribution of CSR Funds
Maharashtra continues to receive the highest allocation of CSR funds, with approximately 18% of total CSR spending.
Other states like Gujarat, Uttar Pradesh, Rajasthan, Karnataka and Tamil Nadu also receive significant investments with around 26% of the total CSR spending.
However, less developed regions, especially in the North East and Jammu Kashmir, still struggle with low CSR funding.
Balancing this geographic allocation remains a challenge for corporates and policymakers alike. Need help directing your CSR initiatives effectively? Contact Protean for guidance.
Collaboration in CSR: The Way Forward
Corporates are increasingly adopting a collaborative approach to CSR, partnering with other companies, non-profits, and government initiatives to maximise impact. This collaborative model is especially beneficial in sectors like education and healthcare, where pooling resources can lead to greater scale and effectiveness.
Additionally, digital transformation has played a crucial role in amplifying the impact of CSR. With advancements in technology, corporates are finding new ways to reach underserved populations and monitor the outcomes of their CSR initiatives. Want to explore how digital transformation can enhance CSR projects? Read more here.
Emerging Trends: Blended Finance and Impact Bonds
Blended finance, which combines CSR funds with private capital, has emerged as an innovative way to scale CSR initiatives. It allows corporates to de-risk their investments while leveraging additional funds for high-impact projects.
Instruments like Development Impact Bonds (DIBs) and Pay-for-Performance models are being adopted to enhance transparency and accountability in CSR projects. These models help ensure that funds are used efficiently and outcomes are measurable.
Challenges in CSR Allocation
While CSR initiatives have led to positive changes, there are still challenges:
- Regional Imbalance: Certain states, such as those in the North East, receive lower CSR allocations, despite having significant development needs.
- Lack of Impact Assessment: Many companies struggle to measure the long-term impact of their CSR initiatives, which can lead to inefficient use of resources.
- Duplication of Efforts: In some cases, companies end up duplicating government schemes or other CSR projects, which reduces the overall effectiveness.
Addressing these challenges requires a more strategic and data-driven approach to CSR funding.
Conclusion
Also Read: Expand Your Knowledge of CSR in India
- CSR in Education: Why It Matters https://proteantech.in/articles/need-for-csr-in-education-sector/
- Digital Transformation & CSR in Education https://proteantech.in/articles/digital-transformation-csr-education/
- Vidyasaarathi: Your Guide to Corporate CSR in Education https://proteantech.in/articles/vidyasaarathi-csr-corporate-guide/
- Impactful Giving: CSR Scholarships and Vidyasaarathi https://proteantech.in/articles/csr-impact-scholarship-vidyasaarathi/
- Celebrating Success: CSR Stories with Vidyasaarathi https://proteantech.in/articles/vidyasaarathi-csr-success-stories/
- Story by Bruhadeeswaran R.
