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

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• 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

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• • • 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

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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.

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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.