According to data available from the Union ministry of corporate affairs, India Inc. used the largest portion of its compulsory Corporate Social Responsibility (CSR) fund in the education sector during FY16-17 and FY20-21, followed by the health and rural development sectors.
The education sector received 29,918 crores in CSR grants throughout these five fiscal years. According to the data, rural development and allied programmes received $9,820 crore, while the health sector received $2,0716 crore.
The CSR Law
The Companies Act’s Section 135 and Schedule VII, as well as the 2014 Companies (CSR Policy) Rules, offer the general foundation for CSR. For Indian businesses with a turnover of more than $1 billion or a net profit of at least $5 billion, CSR spending is compulsory, and businesses must submit annual reports to the government detailing their CSR efforts.
The CSR data indicates that there are 29 heads under which the monies are allocated. The establishment of orphanages, slum area development, socio-economic disparities, special education, Swachh Bharat Kosh, technology incubators, and training to promote sport are a few of these, in addition to education, health, and rural development.
Sanitation and access to clean water are other well-liked CSR priorities that receive a considerable amount of funding. Businesses may also make direct contributions to the PM National Relief fund.
Preferred Location for CSR Projects
In reply to the Rajya Sabha, the corporate affairs ministry said, “Around 33% of the total CSR spent by the companies is in the states of Maharashtra, Karnataka, Gujarat, Andhra Pradesh and Tamil Nadu. Similarly, around 60% of the total CSR spent by the companies is in the areas of education, health care and rural development-related activities.”
While the majority of businesses prefer to use their CSR funds in the state where their headquarters or factories are located, corporate law permits businesses to use the funds everywhere in India. “The 2nd proviso to Section 135 (5) of the Act provides that the company shall give preference to the local area and areas around it where it operates. In order to ensure an all-India spread of CSR expenditure, the Ministry vide General Circular no. 14/2021 dated 25.08.2021 had clarified that the emphasis on the local area is only directory and not mandatory in nature and companies need to balance local area preference with national priorities,” the government’s reply in the Upper House said.
CSR and GDP
According to the data, the amount of industrial activity in a state is likewise reflected in the state’s portion of CSR money. The largest amount (15,000 crores) in CSR was given to Maharashtra, which contributes the most to India’s GDP over the course of five years. Karnataka received $5,922 billion, while Gujarat received $5,294 billion.