According to government records, around 60 per cent of the total CSR funds spent by companies in the last seven financial years were in the areas of education, healthcare and rural development-related activities. The corporate affairs ministry has stated in a written response to the Lok Sabha that during the time period, about 33% of the total CSR funds spent by businesses were in Maharashtra, Karnataka, Gujarat, Andhra Pradesh, and Tamil Nadu.

The CSR Mandate

Under the Companies Act, 2013, a certain class of profitable companies are required to shell out at least two per cent of their three-year annual average net profit towards CSR (Corporate Social Responsibility) activities in a particular fiscal.

CSR is a board-driven process and the board of a company is empowered to plan, decide, execute and monitor CSR activities of the company based on the recommendation of its CSR Committee.

No Compulsion with Regards to Location of CSR Project

Minister of State for Corporate Affairs Rao Inderjit Singh has said in the written reply that the government does not issue any specific direction to the companies to spend in any particular geographical area or activity.

“An analysis of CSR data during the period 2014-15 to 2020-21, reveals that around 33 per cent of the total CSR spent by the companies is in the states of Maharashtra, Karnataka, Gujarat, Andhra Pradesh and Tamil Nadu. Similarly, around 60 per cent of the total CSR spent by the companies is in the areas of education, healthcare and rural development-related activities,” he said.

In order to encourage balanced CSR spending across the country, he pointed out that section 135 (5) of the Companies Act, 2013 provides that companies shall give preference to local areas around it where it operates. He further added, “However, to ensure all-India spread of CSR expenditure, the ministry, in a circular issued on August 25, 2021, had clarified that the emphasis on the local area is only a directory and not mandatory, a prerogative that the companies need to balance local area preference with national priorities.”

In a separate written reply, Corporate Affairs Minister Nirmala Sitharaman said all CSR eligible companies have spent a cumulative CSR amount of Rs 24,865.46 crore in FY 2020-21. Out of the total amount, Rs 6,946.75 crore was spent on ‘healthcare-related activities’, including activities related to COVID-19.