India has made significant strides as the first nation to mandate Corporate Social Responsibility (CSR) by law, profoundly influencing social and economic development over the last decade. Under this legislation, companies meeting specific profitability thresholds are required to allocate 2% of their average net profits from the previous three years towards social responsibility initiatives.
Since its implementation in April 2014, the approach to CSR in India has transformed from voluntary contributions to a strategic framework that aligns business objectives with societal needs. Initially, companies focused on funding projects near their operations to ensure compliance and visibility.
From FY15 to FY22, there was a notable increase in CSR funding, with a total of Rs 1,09,032 crore invested in various social initiatives. In FY22 alone, CSR contributions amounted to Rs 25,715 crore directed towards social sector funding. This shift indicates a move from mere compliance to initiatives that are impact-driven, particularly in vital areas such as education, health, livelihoods, agriculture, and skill development, especially in underserved regions.
Despite the notable progress, several challenges persist. Only 2% of CSR funds are allocated to aspirational districts, underscoring the need for better distribution of resources. Additionally, CSR initiatives have often been dominated by administrative and HR functions, which has resulted in fragmented approaches that limit their overall effectiveness.
To tackle social issues more effectively, companies are increasingly leveraging their strengths in finance, technology, and organizational skills. Noteworthy examples include Raji Finserv's collaboration with Neonatal, a startup focused on newborn care, and the Mahindra Group's educational initiatives aimed at supporting underprivileged students.
The ongoing report emphasizes the need for sustained investment in transformative population-level changes. It suggests that future CSR efforts should prioritize sectors traditionally overlooked by private funding. The advancements achieved through CSR in India reflect its potential to foster meaningful social change, though continuous innovation and targeted strategies are essential to address existing disparities and maximize impact.
Q1. What is the purpose of Corporate Social Responsibility in India?
Answer: The purpose of CSR in India is to ensure that companies contribute to social welfare by allocating a portion of their profits to initiatives that address societal needs, thus enhancing social and economic development.
Q2. How much are companies required to spend on CSR activities?
Answer: Companies that meet specific profitability criteria are mandated to spend 2% of their average net profits from the last three financial years on CSR activities.
Q3. What are the main areas impacted by CSR initiatives?
Answer: CSR initiatives mainly focus on education, health, livelihoods, agriculture, and skill development, particularly targeting underserved communities.
Q4. What challenges are faced in implementing CSR in India?
Answer: Key challenges include the low allocation of funds to aspirational districts and the dominance of administrative functions, which can lead to fragmented CSR efforts.
Q5. How can companies innovate in their CSR approaches?
Answer: Companies can innovate by leveraging their core competencies in finance and technology to create impactful partnerships and initiatives that address pressing social issues.
Question 1: What percentage of profits must companies allocate for CSR in India?
A) 1%
B) 2%
C) 5%
D) 10%
Correct Answer: B
Question 2: Which sector has seen significant investment from CSR funding from FY15 to FY22?
A) Defense
B) Health
C) Aerospace
D) Information Technology
Correct Answer: B
Question 3: What is a major challenge faced by CSR initiatives in India?
A) Lack of interest from companies
B) Low allocation to aspirational districts
C) High administrative costs
D) Inadequate government support
Correct Answer: B
Question 4: Which company partnered with Neonatal for CSR initiatives?
A) Tata Group
B) Raji Finserv
C) Mahindra Group
D) Infosys
Correct Answer: B
Question 5: What should future CSR efforts focus on according to recent reports?
A) Urban development
B) Historical sectors lacking private funding
C) Luxury goods manufacturing
D) International aid
Correct Answer: B
Kutos : AI Assistant!
