India was the first country to make Corporate Social Responsibility (CSR) mandatory under the Companies Act, 2013.

More on the news

• Between 2014 and 2023, companies spent ₹1.84 lakh crore under CSR..

What is CSR?

• CSR refers to Corporate Social Responsibility (CSR)
• Nodal Ministry: Ministry of Corporate Affairs.
• It is a practice where companies contribute to social, economic, and environmental welfare alongside making profits.
• CSR in India
  • Companies are required to spend a minimum of 2% of their net profit on CSR activities under the Companies Act, 2013.
  • From 2014 to 2023, a total of ₹1.84 lakh crore has been spent on CSR.
• Applicability:
  • CSR provisions apply to companies with:
    • Net worth over Rs 500 crore

Enroll now for UPSC Online Course

• • • Turnover over Rs 1,000 crore
    • Net profit over Rs 5 crore
• Components
  • Social Responsibility: Supporting employees, communities, and society.
  • Environmental Responsibility: Reducing environmental harm and promoting sustainability.
  • Economic Responsibility: Ensuring fair business practices while contributing to economic growth.
• Benefits of CSR
  • Improved Reputation: Builds a positive brand image and loyalty.
  • Employee Engagement: Boosts morale, productivity, and retention.
  • Customer Trust: Strengthens trust and loyalty among consumers.
  • Investor Appeal: Attracts socially responsible investors.
• Examples of CSR Initiatives by Indian Corporates
  • Reliance Industries Limited (Reliance Foundation): Through its CSR arm Reliance Foundation, it focuses on rural transformation, education, healthcare, disaster response, sports for development, and arts and culture.
  • Tata Consultancy Services (TCS):  This corporate company invests in education, skill development, employment, and entrepreneurship to bridge the opportunity gap for marginalized groups.
  • ITC (Mission Sunehra Kal); Through this mission, they focus on  sustainable agriculture, water management, and community development.
  • Mahindra & Mahindra: It runs ‘Nanhi Kali’ program that  supports girl child education, alongside initiatives for rural and skill development. 
  • Adani Group: This group runs a sustainable livelihoods program which aims to increase the quality of life in rural areas through various developmental projects. 

Permitted CSR activities under Schedule VII

Check Out UPSC CSE Books From PW Store

Sector-Wise Allocation of CSR Funds

Key recommendation of Injeti Srinivas Committee

• Tax Deductibility: Make CSR expenditure tax-deductible.
• Carry Forward of Unspent Funds: Allow companies to carry forward unspent CSR funds for 3–5 years.
• Alignment with SDGs: Align Schedule VII with Sustainable Development Goals (SDGs), including additional focus areas like sports promotion, senior citizens’ welfare, differently-abled welfare, disaster management, and heritage protection.
• Local vs. National Priorities: Balance local area preferences with national priorities for CSR projects.
• Impact Assessment: Require impact assessment studies for CSR obligations of ₹5 crore or more.
• Registration of Implementation Agencies: Mandate the registration of CSR implementation agencies on the MCA portal.
• CSR Exchange Portal: Develop a portal to connect contributors, beneficiaries, and implementing agencies.
• Social Benefit Bonds: Permit CSR contributions in social benefit bonds.
• Social Impact Companies: Promote the creation and support of social impact companies.
• Third-Party Evaluation: Introduce third-party assessment for major CSR projects.
• Resource Gap Funding: Avoid using CSR funds to fill resource gaps in government schemes and discourage passive contributions to Schedule VII funds.
• Technology-Based Solutions: Encourage CSR spending on innovative, technology-based solutions for social issues.
• Exemption for Small Companies: Exempt companies with CSR obligations below ₹50 lakh from forming a CSR committee.
• Civil Offence for Non-Compliance: Make CSR violations a civil offence, subject to penalty instead of criminal charges.

CSR’s Role in Agriculture

• Focus on Sustainability: Many companies prioritize projects in agriculture under the category of “environment and sustainability”.
  • A recent survey revealed that 23% of companies focus on sustainability initiatives through CSR.
• Impact on Farmers:
  • Over 90.8% of farmers involved in CSR programs reported:
    • Higher incomes.
    • Reduced risks in farming practices.

Challenges in Tracking CSR Contributions to Agriculture

• Limited Reporting Mechanisms:
  • Current systems do not track funds specifically allocated for agriculture-related initiatives.
  • Many CSR activities targeting agricultural sustainability fall under 11 different sectors in Schedule VII of the Companies Act (e.g., gender equality, rural development, environmental sustainability).
  • These sectors include multiple unrelated activities, making it difficult to track agriculture-specific contributions.
• Impact on Sectoral Assessments:
  • Lack of a distinct agricultural category affects transparency and limits the evaluation of CSR’s impact on the agricultural sector.

Enroll now for UPSC Online Classes

Need for Better Reporting and Focus on Agriculture

• Agriculture as a Distinct Sector:
  • Specify agriculture as a separate category in CSR activities to ensure better tracking and allocation of funds.
  • Enhance transparency in reporting and improve targeting of CSR initiatives.
• Addressing Agroecosystem Challenges:
  • Identify sustainability challenges in agriculture (e.g., resource degradation, climate resilience).
  • Direct CSR funds towards priority areas to bring about measurable and meaningful changes.

Conclusion

• Agriculture plays a crucial role in India’s economy and sustainability goals.
• A restructured CSR reporting framework with agriculture as a distinct focus area will help improve the efficacy and transparency of contributions.
• Targeted CSR efforts can strengthen the agricultural sector, ensuring both economic growth and environmental sustainability.

DOWNLOAD PDF