Despite an increase in spending, the impact of CSR funding is ‘not generally felt’: MCA
Despite a recent surge in such investment, the Ministry of Corporate Affairs (MCA) has emphasised the minimal effect of corporate social responsibility (CSR) activities and has asked India Inc to take a long-term approach “to yield productive results.”
In a newsletter sent to various stakeholders on June 30, the ministry stated that CSR spending was Rs 26,210 crore in FY21, up 80% from FY16.
The MCA has also raised concern about the substantial geographical variation in the distribution of CSR monies and has urged businesses to balance their area preferences with national needs. Companies of a specific size are obligated by law to spend at least 2% of their average net profits over the previous three fiscal years.
The MCA has also emphasised the importance of ensuring that the efforts undertaken become self-sustaining so that the CSR programmes may continue smoothly without putting a strain on the companies themselves.
Concerning regional disparities, the ministry stated that only ten states–including industrial states such as Maharashtra, Gujarat, Karnataka, and Andhra Pradesh–got more than 44% of CSR money in FY21, while the eight north-eastern states received only 0.91%.
The MCA noted that one possible cause of such difference could be the requirement in Section 135(5) of the Corporations Act 2013 that corporations give precedence to the areas in which they operate when granting CSR funding.
Education, healthcare, and rural development continue to be the leading recipients of CSR money. According to official data, the education sector (encompassing education, livelihood enhancement initiatives, special education, and vocational skills) received Rs 47,188 crore, or almost 37% of total CSR investment, between FY15 and FY21. The health sector (encompassing healthcare, poverty, hunger, malnutrition, sanitation, and Swachh Bharat) comes in second, accounting for 30% of total expenditure (Rs 38,011 crore). Rural development initiatives received Rs 12,300 crore, or 9.6% of overall CSR spending.
