Posted on by Insights Editor
Print Friendly, PDF & Email

Strengthening the CSR framework is a profitable idea

GS paper 2

Syllabus: Development process and the development industry-the role of NGOs, SHGs and various other groups and associations, donors, charities etc

 

Source: The Hind

Context: Since the establishment of the CSR regime in India under Section 135 of the Companies Act 2013, CSR spending in India has risen from ₹10,065 crores in 2014-15 to ₹24,865 crores in 2020-21.

CSR data for companies:

  • There is no data to verify whether the increase is commensurate with the increase in profits of Indian and foreign (having a registered arm in India) companies.
  • Zero spending: There were 2,926 companies in 2020-21 with zero spending on CSR.
  • Prescribed limit: Companies spending less than the prescribed limit of 2% rose from 3,078 in 2015-16 to 3,290 in 2020-21.
  • Participation: There was also a decline in the number of companies participating in CSR.
  • Private companies have registered their own foundations/trusts: To which they transfer the statutory CSR budgets for utilization.
    • It is unclear if this is allowed under the Companies Act/CSR rules.

 

Other issues:  

  • Ashoka University’s Center for Social Impact and Philanthropy: It says that 54% of CSR companies are concentrated in Maharashtra, Tamil Nadu, Karnataka and Gujarat (receiving the largest CSR spending)
    • The populous Uttar Pradesh and Madhya Pradesh receive little.
  • Only 9% was spent on the environment compared to education(37%) and health and sanitation(29%).
  • The Standing Committee on Finance observed that the information regarding CSR spending by companies is insufficient and difficult to access.

 

Suggestions:

  • National-level platform centralized by the MCA: Where all States could list their potential CSR-admissible projects so that companies can assess where their CSR funds would be most impactful across India.
  • Invest India’s ‘Corporate Social Responsibility Projects Repository’ on the India Investment Grid (IIG): It can serve as a guide for impactful efforts.
  • Companies need to prioritize environmental restoration: In the area where they operate, earmarking at least 25% for environmental regeneration.
  • Involvement of locals: All CSR projects should be selected and implemented with the active involvement of communities, district administration and public representatives.

 

Insta Links:

CSR funding of NGOs

Corporate Social Responsibility

 

Mains Link:

Q. How can the role of NGOs be strengthened in India for development works relating to the protection of the environment? Discuss throwing light on the major constraints. (UPSC 2015)