Corporate social responsibility: It has been more than a decade since India pioneered a law that made corporate social responsibility spending mandatory. Hailed as a bold experiment, the measure was expected to transform corporate philanthropy and bridge developmental gaps. Under Section 135 of the Companies Act, 2013, companies are required to spend a part of their profits on social development.
In 2023–24, India Inc reported record CSR spending of ₹34,909 crore — nearly three times the amount spent a decade ago. The numbers look impressive, yet on the ground, the outcomes tell a different story. Despite the scale of funding, the CSR landscape remains a puzzle marked by unequal reach, low-risk projects, and underutilised funds.
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The concentration trap in CSR spending
Recent data from the ministry of corporate affairs disclosures reveal a striking imbalance. Most CSR funds are concentrated in a handful of industrialised states such as Maharashtra, Gujarat, Tamil Nadu, and Karnataka. Maharashtra alone accounts for the largest share of cumulative CSR receipts, while poorer and conflict-affected states continue to be neglected.
This lopsided allocation stems from a rule allowing companies to spend CSR funds in their “areas of operation.” In practice, this has turned CSR into a geographic straightjacket, mapping corporate footprints instead of addressing human deprivation. Government-designated aspirational districts receive only a fraction of the total outlay, undermining the law’s redistributive intent.
Corporate Social Responsibility: Safe projects, shallow impact
CSR spending is also skewed across sectors. Education and healthcare — areas that are visible, brand-friendly, and easy to showcase — dominate allocations. While vital, these sectors now absorb the lion’s share of CSR budgets, leaving little for livelihoods, gender justice, or rural development. Analysts have dubbed this trend “fashionable giving” — corporate philanthropy that looks good in annual reports but stops short of tackling structural deficits.
Unspent CSR funds are another red flag. In FY24 alone, about ₹2,196 crore remained unused. Many companies parked these funds with government-controlled accounts or central schemes, indicating a mismatch between planning cycles and project execution. This pattern reduces CSR to a compliance exercise rather than a vehicle for meaningful social change.
Globally, the boundaries between corporate philanthropy and sustainability have blurred, giving rise to the ESG movement — where social responsibility is not charity but strategy. India’s CSR regime, however, remains trapped in an earlier phase, focused more on compliance than coherence with environmental and governance standards. This disconnect is striking at a time when global investors are tying capital flows to sustainability metrics. Aligning CSR reporting with ESG frameworks could make India’s corporate social spending more transparent, comparable, and attractive to long-term capital. Without such alignment, CSR risks becoming a parallel exercise detached from corporate purpose and investor accountability.
The other weakness of India’s CSR story is its short horizon. Most projects are designed for annual reporting cycles, not long-term social transformation. Very few corporates are investing in frontier areas such as renewable energy access, digital inclusion, or climate adaptation — fields where patient capital could make the greatest difference. Instead, the comfort of education drives and health camps continues to dominate. Without longer gestation projects that build resilience and livelihoods, CSR remains episodic rather than developmental. Innovation, not visibility, must define its next decade.
Blurring lines between public and private purpose
CSR’s increasing alignment with government priorities further dilutes its purpose. Large corporate transfers to national funds may tick statutory boxes but defeat the original idea—using private capital to innovate, experiment, and reach underserved communities. The trend of risk aversion has created a comfort zone for firms while perpetuating regional inequalities.
Still, not all trends are bleak. According to Sattva Consulting’s State of CSR in India 2024 report, corporate giving is expanding into Tier-2 cities and emerging industrial belts. CSR flows to smaller urban clusters have grown by over 50% in three years, signalling an evolving mindset among Indian firms.
Reform can begin with simple administrative fixes. The government should incentivise CSR investments in backward and aspirational districts across Jharkhand, Chhattisgarh, Bihar, Odisha, Madhya Pradesh, and the Northeastern states. Mandating third-party evaluations and randomised audits would also shift the focus from compliance to measurable outcomes.
As the law enters its second decade, the question is no longer about compliance but credibility. Will India’s CSR framework evolve into a model of accountable redistribution—or remain a ritual of corporate benevolence? The next phase of reform must demand geographic equity, impact measurement, and community partnerships. Only then can mandatory CSR fulfil its founding promise: private money serving public purpose through measurable change.