Uncovering the geographical skew in CSR spending in India and opportunities for impactful allocations

ABSTRACT

The enforcement of the Companies Act in 2013 resulted in India becoming the first country to mandate a law for corporate social responsibility (CSR). In line with it, select Indian companies are mandated to spend two per cent of their net profits annually on CSR activities. The overall objective is to contribute toward improving India's various socio-economic indicators. Despite its noble intentions, the implementation of CSR in India has notable areas for improvement. At a national level, there is a significant issue of misallocated distribution of CSR funds, mainly in terms of geographical focus. Our analysis of CSR spending data for the last seven years reveals that a large proportion of CSR funds are spent in states already performing well on various socio-economic indicators. In contrast, underdeveloped and economically disadvantaged states receive minimal CSR expenditures. We suggest various policy interventions to address India's geographical imbalance of CSR spending.

KEYWORDS:

• Corporate social responsibility
• Section 135 of the Companies Act 2013‌
• aspirational districts
• sustainable development
• social impact
• public policy

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 Crore is a unit of measurement in the Indian numbering system, which is equal to ten million. As of May 2023, with the currency conversion rate being approximately 1 INR to 0.012 USD, one Crore INR is equivalent to approximately 0.12 million USD".

2 In Figure 1, the total CSR spent approximately equals USD 15,492.067 million; Pan-India and other centralised funds' allocation approximately equals USD 6,235.41 million; the share of CSR spent in Maharashtra State approximately equals USD 2,270.93 million.

3 Calculated as: INR 500 Crores * 100 per cent + INR 500 Crores * 120 per cent.

Additional information

Notes on contributors

Abhishek Gawande

Abhishek Gawande is a Doctoral scholar in the Strategy and Entrepreneurship area at the Indian Institute of Management Nagpur, India. He holds an M.B.A. with a Gold Medal in Environmental Management from the Indian Institute of Forest Management (IIFM), Bhopal, and has a bachelor's degree in Mechanical Engineering. He possesses cross-functional experience of working with both public and private stakeholders at various levels. His research interests include sustainable management of natural resources, corporate social responsibility and corporate sustainability. He has published research articles in journals of national and international repute.

Atul Arun Pathak

Dr Atul Arun Pathak is an Associate Professor in the Strategy and Entrepreneurship area at the Indian Institute of Management Nagpur, India. He has over 20 years of international work experience across industry and academia. Dr Pathak teaches various foundational and advanced courses on Strategic Management, International Business, Design Thinking, Innovation, International HRM, and Management Consulting in MBA, Executive MBA and PhD programs at leading Indian institutes. Dr Pathak's research has been published as papers and cases in various international journals. He has received best-paper awards when presenting his research at various international and national conferences. Before joining academia, Dr Pathak has wide-ranging international work experience in the Banking, Information Technology, and Consulting industries across multiple geographies (UK, South Africa, Singapore and India)