India Inc. has utilised the highest share of its mandated Corporate Social Responsibility (CSR) fund in the education sector, followed by health and rural development between FY16-17 and FY20-21, according to data available with the Union ministry of corporate affairs.
During these five financial years, the education sector received ₹29,918 crore in CSR funds. The health sector received ₹2,0716 crore, and rural development and related schemes got ₹9,820 crore, the data showed.
The broad framework for CSR has been provided under Section 135 and Schedule VII of the Companies Act and the Companies (CSR Policy) Rules, 2014. CSR spending is mandatory for Indian companies with more than ₹1,000 crore of turnover or net profit of at least 5 crores and corporates are required to file annual details on their CSR activities with the government.
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In a reply to the Rajya Sabha, the corporate affairs ministry said, “Around 33% of the total CSR spent by the companies is in the states of Maharashtra, Karnataka, Gujarat, Andhra Pradesh and Tamil Nadu. Similarly, around 60% of the total CSR spent by the companies is in the areas of education, health care and rural development-related activities.”
While most companies prefer to spend their CSR funds in the state where they have their corporate hub or factories, corporate law allows companies to spend the money anywhere in India. “The 2nd proviso to Section 135 (5) of the Act provides that the company shall give preference to the local area and areas around it where it operates. In order to ensure an all India spread of CSR expenditure, the Ministry vide General Circular no. 14/2021 dated 25.08.2021 had clarified that the emphasis on local area is only directory and not mandatory in nature and companies need to balance local area preference with national priorities,” the government’s reply in the Upper House said.
A large amount is also spent at the national level. In FY21, ₹7,490 crore was spent not in states but at the pan-India level.
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A state’s share of CSR funds received also reflects the level of industrial activities in the state, the data suggested. Maharashtra, India’s biggest contributor to GDP, got the highest amount ( ₹15,000 crore) in CSR in the five year period. Karnataka got ₹5,922 crore, with Gujarat receiving ₹5,294crore.
According to the CSR data, there are 29 heads under which the funds are distributed. Apart from education, health and rural development, setting up orphanages, slum area development, socio-economic inequalities, special education, Swachh Bharat kosh, technology incubators, and training to promote sport are among these.
Sanitation, safe drinking water are also among the popular heads that receive a substantial amount of CSR funds. Companies can also donate directly to the PM National Relief fund.