Only 30% Indian districts get CSR funding for development needs: Study

CSR funding misses entirely in 23% of districts, partly in 47%: Study

Only around 30 per cent of eligible rural districts in India receive corporate social responsibility (CSR) funds aligned with their development needs, while 23 per cent show a complete mismatch between the funds received and their requirements, and 47 per cent show partial misalignment, a recent survey by the Development Intelligence Unit (DIU) has found.

 

DIU is a collaborative initiative of Sambodhi Research and Communications and Transform Rural India, a non-governmental organisation. The survey also highlights that low-income or aspirational districts in Jharkhand, Chhattisgarh, Bihar, Odisha, Madhya Pradesh, and the Northeastern states — regions with the greatest development deficits — remain underfunded in terms of CSR spending.

 

“Ironically, these six states account for over 60 per cent of India’s aspirational districts (according to NITI Aayog) but receive less than 20 per cent of the total CSR pool,” the survey stated.

 

It also noted that CSR spending continues to be concentrated in three broad sectors — education, healthcare, and rural poverty alleviation — which together account for over 60 per cent of all CSR funds. Meanwhile, critical sectors such as environmental sustainability and livelihood enhancement receive inadequate attention.

 

The survey uses a refined methodology to estimate CSR spending in rural areas, focusing only on districts where more than 50 per cent of the population is rural (according to Census 2011) and on sectors with a clear rural development focus.

 

The analysis computes average per capita CSR spending and compares it against the Rural Quality of Life (RQoL) Index to evaluate how appropriately funds are allocated. 

 

The RQoL Index is a weighted composite index developed by DIU using administrative data (public intent). It encompasses 69 indicators across nine key thematic pillars: Agriculture, Economic Ability and Employment, Education, Gender, Governance, Health and Nutrition, Infrastructure and Amenities, Social Security, and Sustainability and Climate Resilience.

 

The index classifies districts within each state into tertiles (high, medium, low) to enable intrastate comparisons and better planning.

 

The report says its findings reveal a stark divergence between need and actual CSR funding, suggesting that CSR strategies are often driven by corporate convenience or compliance motives rather than a strategic, evidence-based approach.

 

“Moreover, many CSR initiatives suffer from the lack of impact assessments, duplication of government schemes, weak community participation, and poor innovation or strategic planning. Often, projects are implemented in a top-down manner, driven more by corporate discretion than by actual deprivation or community needs,” the report said.

 

India’s CSR framework, mandated under Section 135 of the Companies Act, 2013, requires companies to allocate a portion of their profits towards social development.

 

Section 135 applies to companies with a net worth of ₹500 crore or more, or a turnover of ₹1,000 crore or more, or a net profit of ₹5 crore or more during the immediately preceding financial year. The Act also mandates that eligible companies must spend at least 2 per cent of their average net profit over the previous three financial years on CSR activities.

 

In 2022–23, CSR expenditure in India reached ₹29,989.92 crore, registering 12.8 per cent growth over the previous year — a sign of recovery after pandemic-induced disruptions.

 

“However, this growth masks a deep structural imbalance in the geographical distribution of CSR funds. CSR allocations tend to follow the geographical footprint of donor companies — that is, where their headquarters or manufacturing/mining units are located. Consequently, industrialised states like Maharashtra, Karnataka, Gujarat, Tamil Nadu, Andhra Pradesh, Telangana, and Delhi have historically captured a disproportionately large share of CSR funds,” the report said.

 

The report strongly advocates a shift from compliance-led CSR to a development-oriented, impact-driven approach.

 

“It recommends that the Ministry of Corporate Affairs introduce policy directives to encourage better geographic and sectoral targeting of CSR funds,” the paper added.   

CSR stays close to home, skips the needy 

2022-23 CSR spend: ~29,989.92 crore, up 12.8% over previous year

Rich states hog it: Maharashtra, Karnataka, Gujarat, Tamil Nadu, Andhra Pradesh, Telangana, New Delhi

Poor states lose out: Bihar, Madhya Pradesh, Odisha, Northeast, etc

Funds flood education, health, poverty; skip climate, jobs

Most projects: Top-down, token, impact-light