7 years of CSR

7 years of CSR

Published on :- November 22nd, 2022

In 2014, India became the first country in the world to mandate CSR spend through legislative action. The legal mandate on CSR applies to companies that have:
  • Net worth of INR 500 Crore or more, OR
  • Annual turnover of INR 1000 Crore or more, OR
  • Net profit of INR 5 Crore or more.

Companies, thus coming under the CSR mandate, have to spend at least 2% of their average net profits of the preceding three years on social impact programmes in every financial year.

In the 7 years of implementation of this law, more than 1.22 Lakh Crore has been cumulatively spent by 29,000+ companies. CSR spending has more than doubled since its inception!

Despite the increase in CSR spending, less than 2% is spent on Aspirational districts. The spending patterns continue to remain extraordinarily sticky. The recipient sectors and geographies, as well as the funding companies, have remained constant over the years. Here is an overview of the top trends (as per the MCA portal as of March 2022):

This spending pattern has led to an unfavourably skewed distribution of CSR funds, where states with lower incomes and SDG scores receive the least CSR support. States like Bihar, Uttar Pradesh, Jharkhand, Madhya Pradesh, and West Bengal receive very low per capita CSR investments per year.

States highlighted in this data have low per capita GDP, high scores on the multidimensional poverty index, low scores on the Niti Aayog’s SDG index, and very low per capita CSR investments per year.

Region-wise CSR Spend

We see a similar spending pattern across regions, with the share of regional CSR spend remaining almost consistent for the last seven years.

Eastern, Central and North-Eastern regions receive lower CSR investments than other regions. With the North-East region receiving the least CSR funding (1.53%). More than 1/3rd of the total CSR spend goes to PAN India (projects across multiple states). And nearly 1/4th of CSR spend is in the Western region!

Sector-wise CSR Trends

CSR funding is also heavily skewed towards select sectors when it comes to distribution – education being a favourite. The most popular sector chosen for CSR projects, Education received 30% of the total CSR – ~36,000 Crore – between 2014-21. In fact, the sector received around the same amount of funding as the combined funding for healthcare and rural development projects, which came in 2nd and 3rd respectively.

More than 70% of CSR spend is in the top 5 development sectors: Education (30%), Healthcare (20%), Rural Development Projects (10%), Environment Sustainability (6%), and Poverty, Eradicating Hunger, Malnutrition (5%). However, funding in rural development projects has been on a decline since 2018-19.

The impact of COVID-19 is also reflected in CSR funding. From developing vaccines to driving relief efforts, corporates were at the forefront of all activities, working in tandem with the government. In FY 2019-20, funding in Healthcare almost doubled from its previous year (up by 47%) and funding in the education sector increased by 21%. Amongst the top sectors, Healthcare and Central Government Funds received more funding during the pandemic than other sectors.

CSR Spend across SDGs

Two SDGs alone receive 50% of the total CSR spending. SDG 4 - Quality Education (30%) and SDG 3 – Good Health and Well-being (20%).

SDG 11- Sustainable Cities and Communities, and SDG 9- Industry, Innovation and Infrastructure receive the least CSR funding.

CSR – The Next Frontier

While some of the traditional Indian corporates have been actively involved in philanthropy for decades, most other companies took their first steps into the social sector after the CSR law came into effect in 2014. In seven years of implementation, companies seem to have achieved a high level of legal compliance.

The next frontier for companies will be going beyond legal compliance towards a strategic and long-term CSR vision for the company as
  • There are regional disparities in CSR spending and
  • Certain sectors need greater attention and funding.

For a detailed analysis of CSR funding, explore our assets on India Data Insights.

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