Companies are spending increasing amounts on charitable contributions through the corporate social responsibility (CSR) route. The total expenditure in 2018-19 (FY19) was Rs 11,867.2 crore. This is the highest since such spends became mandatory in FY15. (See chart 1)
The Companies Act made it necessary for firms to spend at least two per cent of their average net profit over the preceding three years on CSR projects. The spends could be under heads ranging from education and healthcare, to sports or for ensuring gender equality.
The FY19 spend is 17.2 per cent higher than the Rs 10,128.3 crore spent the previous year, shows data from corporate tracker nseinfobase.com. It was Rs 6,552.5 crore in FY15. The biggest spends (Rs 4,406 crore) were for schedule VII (II) which involves ‘promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects.’ The next biggest spend (Rs 3,206.5 crore) was under schedule VII (I). This involves initiatives for ‘eradicating hunger, poverty and malnutrition, promoting health care including preventinve health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water.’ Rural development projects got Rs 1,319 crore, placing it third in the list of segments which received CSR capital. Others include contributions for environmental purposes, for the benefit of the armed forces and disaster management; among others. (See chart 2)
A geographic concentration does seem to be present. Maharashtra and Gujarat top the list.
The former received Rs 931.4 crore from over 501 companies. This is nearly half of the 1015 companies out of the 1360 firms listed on the National Stock Exchange which are required to make some spends for CSR purposes and for whom the data is available. Maharashtra tops the country in terms of gross state domestic product at factor cost at current prices (with a base year of 2011-12) shows Reserve Bank of India data. Gujarat is also in the top five.
States like Bihar, which rank lower on development, also rank lower on corporate largesse. It received contributions from 209 companies in FY19. The total amount spent was Rs 274.2 crore. States in the North East received low funding as well. Arunachal Pradesh got Rs 134.2 crore from 170 companies. Similar numbers were seen in other states like Sikkim and Meghalaya. (See chart 3)
Large spends have also seemed to have prompted closer attention to how the money is spent, according to experts.
Amit Tandon, founder and managing director of Institutional Investor Advisory Services India (IiAS) said that this has become more common. "There are more and more companies who are doing impact assessment...people recognise the need to do it," he said.
Pranav Haldea, managing director at Prime Database said that low CSR budget could act as a constraint for some companies to adopt monitoring mechanisms. "It may only make sense for firms with very large budgets. Smaller companies may find it too expensive to employ an agency for external audits on a regular basis," he said.
|Note:Amounts are split equally where no information is given|
|Maharashtra is the biggest beneficiary|
|State||Amount Spent (in crore Rs)||Number of Companies|
|JAMMU & KASHMIR||174.24||190|
|DADRA & NAGAR HAVELI||140.47||181|
|DAMAN & DIU||134.99||166|
|ANDAMAN & NICOBAR ISLANDS||106.14||160|
|STATE NOT KNOWN||782.52||296|