India’s backward districts received a mere 2.5% of Rs 1.84 lakh crore of corporate social responsibility (CSR) funds spent by companies across the country over the past nine years, said a study, titled ‘State of CSR in India: 2014-2023’, by social impact and consulting firm Sattva Consulting.
“While it’s a positive trend compared to previous years, the percentage of funds being spent in aspirational districts is still significantly low,” Srikrishna Sridhar Murthy, CEO of Sattva Media, told ET.
The funds are not yet reaching the sectors in critical need, he said, adding,“One reason for this is that the ecosystem in the bottom states is still underdeveloped, leaving funds concentrated in specific regions or states.”
In 2022-23, companies invested a total of Rs 1,355 crore (4.5%) in aspirational districts, a 30% increase from the previous year, according to the study. However, 20% of companies spent less than their prescribed amount in 2022-2023.
The data also revealed that public sector undertakings (PSUs), which constitute 20% of total CSR spending, have seen a decline in their annual spending since 2020-21. “According to the law, PSUs need to spend 60% of their CSR on aspirational districts. However, they have a traditional process involving tenders and selective NGOs (non-governmental organisations), making it challenging to work with them,” Murthy said.
The report also indicated that companies are no longer merely writing cheques for compliance but are increasingly focused on seeing real impact. “In FY 2022-23, 13,600 (56%) of companies spent more than their prescribed amount. The top recipients of CSR spending over the last nine years have been
in education (29.9%), followed by healthcare (21.83%) and rural development (8.77%),” said the report.
In contrast, sectors such as sanitation, other government funds, the Prime Minister’s National Relief Fund (PMNRF) and vocational skills received the least funding.
CSR spending has become more strategic, said Murthy. “Businesses are seeing more value in it. They are achieving better engagement with their stakeholders, branding and employee appreciation. Thus, an increase from 2% mandated to 2.1% or 2.5% will not significantly impact the company,” he said.
The top companies in terms of CSR spending include Reliance Industries, TCS, ONGC and HDFC.
In 2022-23, more than Rs 19,000 crore (65%) of CSR expenditure was funneled through agencies, a Rs 4,000 crore increase from the previous year. Murthy said, “Corporates believe that collaborating with more specialists leads to better impact. NGOs that are well-prepared to work with corporates, possessing compliance, credibility and the right processes, are the ones capitalising on this trend.”
Based on key insights from the report, Murthy said the CSR money allocated to government initiatives, such as the PMCARES fund and the Namami Gange programme, is declining. This suggests that more companies prefer to manage their spending independently to maintain control over the value they can potentially create, he said. Sattva’s report analysis is based on data from the Ministry of Corporate Aairs (MCA Portal).
Companies with annual budgets in the range of Rs 100- 500 crore and Rs 1-10 crore contribute to half of total annual CSR spend. Annual per capita CSR funding is highest in Delhi (Rs 372). Delhi, Goa and Maharashtra are top states with per capita CSR funding of more than Rs 250.
Seven aspirational districts receiving most CSR funds. Madhya Pradesh (9.8%), Andhra Pradesh (8.4%) Jharkhand (7.1%) Chhattisgarh (6.5%) Gujarat(6.3%) Odisha (5.4%) Uttarakhand (5.3%)
