State of CSR funding in India

Corporate Social Responsibility (CSR) is a concept where companies incorporate social, environmental, ethical and moral concerns into their policies and day to day operations. CSR is a realization that profit can not be the sole reason or raison d’être of any companies existent. There has to be a symbiotic relationship between the companies and their external environment in which they operate.

In this article, we will talk about the state of CSR in India during the year 2019-20.

CSR in India

Section 135 of the Indian Companies Act mandates companies to “CSR spend of 2 per cent of average net profits … during the three immediately preceding financial years.” Effective from 2013, this rule is applicable for all companies “having a net worth of rupees five billion or more, or turnover of rupees ten billion or more or a net profit of rupees fifty million or more during any financial year.”

How much was the decrease in the total amount?

The total amount of CSR spent in India, during the financial year 2019-20 was 17,884.75 Cr. INR. This amount was 4.12% less than the amount spent during the previous financial year.

Which were the sectors that witnessed the highest and lowest growth in 2019-20?

The field of art and culture and contributions towards the PMNRF(Prime Minister’s National Relief Fund) were the only two overall categories where the amount spent were more than the previous year. Rest, every other development sector saw negative growth on CSR spent and even among this, the CSR spent on Clean Ganga Fund, Slum Area Development and Swacch Bharat Kosh took a major hit.

Which sectors got the most funding?

Education-related CSR projects get the most CSR funding. The CSR spent during 2019-20 on Education, differently-abled and livelihood was almost 40% of the overall amount spent. Apart from this Health, Environment and Rural development were the other three major development sectors that got the most funding. These all four sectors garnered almost 85% of the total CSR spent in 2019-20.

In which states CSR spent was highest?

If we look at state-wise, there were two states where more than 1000 cr. INR has spent: Maharashtra(2108 cr.) and Karnataka(1137cr.). As these two states have a fair share of India’s big corporates and Industries, it was obvious that these states received the major portion of CSR funding. Besides these two, states of Assam, Gujarat, Tamilnadu, Andhra Pradesh and Rajasthan were the other states where more than 500 cr. of CSR was spent.

CSR contribution percentage-wise in Gender equality and women empowerment? 

From the total CSR amount that was spent during 2019-20, only 0.53%  and 0.14% of it went towards Women Empowerment and Gender Equality related projects, respectively. The data available on the government website clubs Gender equality, Senior Citizens Welfare, Setting Up Homes And Hostels For Women, Setting Up Orphanage, Socio-Economic Inequalities and Women Empowerment under one category. This whole category too received only 2.56% (458.84 Cr INR) of the total CSR amount spent.

CSR spent: Company-wise

Of all the companies that spent CSR during 2019-20, only 22% of them were listed; the rest 78% were unlisted companies. In private companies, Reliance Industries and Tata Consultancy Services were the two major contributors. ONGC and Indian oil were the top two public companies based on the CSR amount they spent. In the whole CSR amount spent during the year, 76% contribution was from the private companies and the rest 24% from the public sector companies.

CSR compliance: Expenditure and overview

There was a total of 5,223 companies in 2019-20 that spent their CSR amount on around 18,765 projects. A little more than 58% of these companies spent more than the prescribed CSR amount; 32% of them spent less than the prescribed amount; only around 7% of these companies spent the same amount as prescribed and 2.43% of them did not spend anything of the CSR money they had prescribed.

While we wait for the CSR figures and reports from the corporates and government for the year 2020-21, it is being assumed that the major flow of CSR activities from the start of 2020 onwards has been directed towards COVID relief operations and other related activities. Many corporates have made huge contributions to the PM CARES fund as the Ministry of Corporate Affairs has clarified that these contributions will qualify as CSR. That means CSR will play a crucial role in India’s fight against the COVID pandemic.

The growing importance of CSR is a piece of evidence that companies have realized that there are bigger goals to achieve rather than just aiming for profits and they have a responsibility towards the community that they must adhere to.

We rise by lifting others and to move forward you have to give back.

Disclaimer: All the data mentioned in this article has been taken from csr.gov.in. For verifying this data please visit the mentioned website.