Corporate Social Responsibility (CSR) Spending in India
Subject: Economy
Why is this in News?
According to a Fulcrum Report based on Ministry of Corporate Affairs (MCA) data, Corporate Social Responsibility (CSR) spending in India increased by 17% year-on-year to ₹40,794 crore in FY25.
Over the past decade, India’s corporate sector has spent ₹2.61 lakh crore on CSR activities.
Key Highlights of the Report
Growth in CSR Spending
- Total CSR expenditure (FY25): ₹40,794 crore
- Year-on-Year Growth: 17%
- Cumulative CSR expenditure (10 years): ₹2.61 lakh crore
CSR Projects
- Total Projects Implemented: 72,233
- Growth over previous year: 21%
- Average Project Cost: ₹56.47 lakh
Keyword: Scale and Impact of CSR
Major Areas of CSR Spending
CSR investments were mainly directed towards:
- Education
- Skill Development
- Healthcare
- Sanitation
- Environmental Conservation
These sectors contribute directly to inclusive growth and the Sustainable Development Goals (SDGs).
Top CSR Contributors
Highest CSR Spenders (FY25)
- Reliance Industries Ltd. – ₹1,309 crore
- HDFC Bank Ltd. – ₹1,039 crore
Concentration of Spending
- The Top 10 companies accounted for 17% of India’s total CSR expenditure.
- Combined spending by the top 10 companies: ₹7,123 crore.
What is Corporate Social Responsibility (CSR)?
Corporate Social Responsibility (CSR) is a business approach in which companies integrate social, environmental, and ethical responsibilities into their business operations and contribute to sustainable development.
Keyword: Responsible Business Conduct
CSR in India
India became the first country in the world to make CSR mandatory by law through the Companies Act, 2013.
Statutory Framework
Legal Provisions
- Section 135 of the Companies Act, 2013
- Companies (CSR Policy) Rules, 2014
Eligibility Criteria
A company must comply with CSR provisions if it satisfies any one of the following criteria during the immediately preceding financial year:
| Criteria | Threshold |
|---|---|
| Net Worth | ₹500 crore or more |
| Turnover | ₹1,000 crore or more |
| Net Profit | ₹5 crore or more |
The “2% CSR Mandate”
Eligible companies must spend:
At least 2% of the average net profits earned during the three immediately preceding financial years on eligible CSR activities.
Permitted CSR Activities (Schedule VII)
CSR funds can be utilised for:
Social Development
- Eradication of hunger, poverty and malnutrition
- Healthcare
- Sanitation
- Safe drinking water
Education
- Promotion of education
- Vocational skills
- Livelihood enhancement
Social Justice
- Gender equality
- Women empowerment
- Welfare of senior citizens
- Support for vulnerable groups
Environment
- Environmental sustainability
- Ecological balance
- Conservation of natural resources
Culture
- Protection of heritage
- Promotion of art, culture and traditional crafts
National Service
- Welfare of Armed Forces, CAPF and paramilitary veterans
Sports
- Promotion of rural sports
- National, Olympic and Paralympic sports
Government Funds
- Contributions to the Prime Minister’s Relief Fund and other notified funds
Research & Innovation
- Research institutions
- Innovation
- Incubators
- SDG-related initiatives
CSR Compliance
India shifted from a “Comply or Explain” approach to a “Comply or Be Penalised” regime in 2021.
Treatment of Unspent CSR Funds
If Related to an Ongoing Project
- Transfer the amount to the Unspent CSR Account within 30 days after the end of the financial year.
- The amount must be utilised within 3 years.
If Not Related to an Ongoing Project
- Transfer the amount within 6 months to a Schedule VII Government Fund.
Penalties for Non-Compliance
Company
- Twice the unspent amount, or
- ₹1 crore, whichever is lower.
Defaulting Officers
- One-tenth of the unspent amount, or
- ₹2 lakh, whichever is lower.
Importance of CSR
- Promotes inclusive and sustainable development.
- Bridges gaps in social infrastructure.
- Supports national development priorities.
- Strengthens corporate accountability and governance.
- Contributes to achieving the Sustainable Development Goals (SDGs).
- Enhances trust between businesses and society.
Challenges
- Uneven geographical distribution of CSR funds.
- Greater concentration among a few large companies.
- Need for better impact assessment and monitoring.
- Limited focus on innovation and long-term capacity building.
Way Forward
- Improve outcome-based monitoring of CSR projects.
- Encourage CSR investments in aspirational and underserved districts.
- Promote collaboration among companies, NGOs, and local governments.
- Align CSR initiatives with national priorities such as Skill India, Digital India, Green Growth, and the SDGs.
- Increase transparency through technology-enabled reporting and social audits.
