CORPORATE SOCIAL RESPONSIBILITY (CSR)

CORPORATE SOCIAL RESPONSIBILITY (CSR)

With Rs 10,085 crore allotted for corporate social responsibility (CSR) in india in FY23, education received the largest proportion of government investment, according to recent data. This sparked discussion regarding the unequal distribution of CSR funding among various industries and geographical areas.

Did You Know?

Understanding CSR and Current Affairs

Corporate Social Responsibility (CSR) in india reflects the evolving societal expectations and changes in global business practices. Staying informed about CSR trends is crucial for anyone involved in competitive exams like IAS, where current affairs play a significant role. Maluka IAS Academy’s to the point Current Affairs notes resources provide a comprehensive guide to the latest news and developments, helping aspirants stay updated.

Solid Foundation for Exam Preparation

Just as CSR strategies require a well-structured approach, excelling in competitive exams like the IAS and PCS also demands a strong foundation. Maluka IAS Academy’s GS Foundation Advance Batch 2025 is specifically designed to build the necessary groundwork for aspirants, ensuring they are prepared to face any challenges the exam might present.

The Importance of Practice

CSR projects thrive on continuous evaluation and effort. Similarly, success in competitive exams requires consistent practice and self-assessment. Maluka IAS Academy’s Prelims and Mains Test Series provides mock exams that simulate real exam conditions, allowing students to refine their strategies and performance.

Staying Ahead in the Competitive Landscape

Just as CSR initiatives evolve to meet the changing needs of society, IAS and PCS exam patterns are constantly updated. Staying on top of these changes is crucial for aspirants. Maluka IAS Academy’s Punjab PCS Online Coaching offers the guidance you need to tackle these evolving challenges, helping you succeed in your PCS journey.

CORPORATE SOCIAL RESPONSIBILITY

• In general, corporate social responsibility CSR in india is a company-wide endeavour to evaluate and assume accountability for the company's impacts on the environment and social welfare.
• It is a self-policing business strategy that supports social responsibility in an organisation. Companies can become aware of their influence on social, economic, and environmental aspects by engaging in corporate social responsibility practices.
• Under clause 135 of the Companies Act, 2013, India is the first nation to mandate CSR spending together with a framework for identifying possible CSR initiatives.
• Most nations have voluntary CSR frameworks, unlike India. Models that were optional initially gave way to mandated CSR regulations in Norway and Sweden.

CSR APPLICABILITY

CSR provisions apply to companies meeting any of the following criteria in the preceding financial year.

• Net worth over Rs. 500 crore
• Turnover over Rs. 1000 crore
• Net profit over Rs. 5 crore.

Such companies must spend at least 2% of their average net profits from the last three financial years on CSR activities, or if newly incorporated, based on the average net profits from preceding financial years.

TYPES OF CORPORATE SOCIAL INITIATIVES

ELIGIBLE SECTORS

CSR activities encompass a range of initiatives, including eradicating hunger and poverty, promoting education and gender equality, combating diseases like HIV/AIDS, ensuring environmental sustainability, and contributing to government relief funds (Like PM CARES and PM Relief Fund) for socio-economic development and the welfare of disadvantaged groups.

CHALLENGES IN CSR COMPLIANCE

• Geographical Disparity in CSR Spending: North Eastern states (Mizoram 6.9 cr.) and Lakshadweep, Leh, and Ladakh receive relatively less support, indicating a regional imbalance. Spending is focused in industrial states like Maharashtra (5375cr.), Gujarat, Karnataka, and Tamil Nadu.
• Trends in CSR Allocation: According to MCA data, three areas account for over 75% of all CSR funding: education, health (including water and sanitation), and rural poverty. Spending in the sector of livelihood enhancement (Rs 1,654 cr) is extremely low.
• PSU vs. Non-PSU Spending: There is a notable disparity in CSR spending between the two sectors, with Non-PSUs contributing 84% of total spending and PSUs making up the remaining 16%.
• Strategic Misalignment in CSR: The real goal of CSR has been undermined by the widespread integration of sustainability and commercial strategies, which place a higher priority on profit margins than on actual social effect.
• Finding the Right Partners: Choosing initiatives that are self-sustaining, scalable, and have a long-term impact are still difficult tasks, even in light of the increased awareness of the importance of CSR compliance.
• Transparency concerns: The corporations have expressed concerns about the local implementing agencies' apparent lack of transparency, including their insufficient attempts to share information about their programs, audit issues, impact assessments, and fund utilisation.

RECENT DEVELOPMENTS IN CSR EXPENDITURE

• Total CSR expenditure increased from Rs 26,579.78 crore in FY22 to Rs 29,986.92 crore in FY23. The number of CSR projects rose from 44,425 to 51,966.
• Companies outside the public sector contributed 84% of the total CSR spend.

SECTOR WISE EXPENDITURE

• Education accounted for one-third of the CSR spend in FY23.
• CSR spending on vocational skills rose slightly to Rs1,164 crore in FY23 from Rs 1,033 crore the previous year.
• Technology incubators got the lowest amount, with only Rs 1 crore in FY23 compared to Rs 8.6 crore in the previous year
• Health, rural development, environmental sustainability, and livelihood enhancement also received significant CSR funds.
• CSR spending on animal welfare surged from Rs 17 crore in FY15 to over Rs 315 crore in FY23.
• CSR expenditure under the Prime Minister Relief Fund dropped to Rs 815.85 crore in FY23, down from Rs 1,698 crore in FY21 and Rs 1,215 crore in FY22.
• Contribution to disaster management fell the most (77%), followed by that on slum development (75%).

REGION WISE EXPENDITURE

• Maharashtra, Karnataka, Gujarat received the most CSR spends while North East states, Lakshadweep and Leh and Ladakh received the least CSR spendings.

WAYS TO ENHANCE THE EFFECTIVENESS OF CSR EXPENDITURE

• Enhancing CSR Engagement and Oversight: Aligning CSR with local government programs like the ADP (Aspirational Districts Program) can boost community participation and engagement, while the government should ensure effective CSR implementation, and leverage AI for better oversight.
• NGOs can work along with companies in remote and rural areas to ensure successful implementation of CSR activities.
• Address Sectoral and Geographical Disparity: Need to invest in higher education and high impact technological and environment friendly projects that focus on skill development and livelihood enhancement.
• Develop CSR programs for underserved regions, offer incentives for spending in less-funded areas or make a mandatory provision to address regional disparity in spending, and collaborate with local NGOs.
• PSU vs Non-PSU Spending Disparity: Encourage PSUs to increase contributions, implement benchmarking, and promote joint CSR initiatives between PSUs and non-PSUs.
• Company Roles and Governance: Conduct regular reviews, set clear objectives, and update governance roles. Establish new SOPs for fund utilization, impact assessments, and detailed checklists.

CONCLUSION

To maximize the impact of CSR, companies must move beyond mere compliance and embrace strategic alignment with local government programs, address sectoral and regional disparities, and ensure transparency and accountability. By fostering stronger collaborations between PSUs and non-PSUs and investing in innovative, scalable projects, CSR can drive sustainable social change and contribute to India’s long-term socio-economic development.