India Inc. has used the highest share of its mandated Corporate Social Responsibility (CSR) funds in the education sector, followed by health and rural development between FY16-17 and FY20-21, according to data available in the Ministry of Union Corporate Affairs.
During these five financial years, the education sector received Rp29,918 crore in CSR funds. The health sector accepts Rp2.0716 crore, and rural development and related schemes got Rp9,820 crore, data shows.
A broad framework for CSR has been provided under Section 135 and Schedule VII of the Companies Act and Corporate Rules (CSR Policy), 2014. CSR expenditures are mandatory for Indian companies with more than Rp1000 crore turnover or minimum net profit of 5 crore and companies are required to submit annual details of their CSR activities to the government.
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In a reply to the Rajya Sabha, the ministry of corporate affairs said, “About 33% of the total CSR spent by companies is in the states of Maharashtra, Karnataka, Gujarat, Andhra Pradesh and Tamil Nadu. Likewise, about 60% of the total CSR issued by the company is in the areas of education, health care, and activities related to rural development.”
While most companies prefer to spend their CSR funds in the states where they have corporate headquarters or factories, company laws allow companies to spend that money anywhere in India. “The 2nd provision of Article 135 (5) of the Law stipulates that the company will give priority to the local area and the surrounding areas where the company operates. To ensure CSR spending is spread across India, the Minister vide General Circular no. 14/2021 of 25.08.2021 has clarified that the emphasis on local areas is only directory in nature and not mandatory and companies need to balance local area preferences with national priorities,” said the government’s response in the Upper House.
Large sums are also spent at the national level. in FY21, Rp7,490 crore is spent not at the state but at the pan-Indian level.
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The state’s share of CSR funds received also reflects the level of industrial activity in the state, according to the data. Maharashtra, India’s largest GDP contributor, gets the highest amount ( Rp15,000 crore) in CSR in a five year period. Karnataka has Rp5,922 crore, with Gujarat receiver Rp5,294 crores.
According to CSR data, there are 29 heads to which funds are channeled. Apart from education, health and rural development, setting up orphanages, slum development, socio-economic disparities, special education, Swachh Bharat kosh, technology incubators, and training to promote sports are among them.
Sanitation, safe drinking water are also among the popular heads receiving large amounts of CSR funding. Companies can also donate directly to the PM National Relief fund.