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In FY24, CSR spending by listed Indian companies rose 16% to ₹17,967 crore, driven by increased profits and regulatory mandates.

What is CSR?

Corporate Social Responsibility (CSR) is a way for companies to give back to society by investing in projects that benefit communities, the environment, and the economy.

In India, CSR is not just a choice—it is a legal requirement for certain companies under the Companies Act, 2013. This law makes India the first country to mandate CSR spending, requiring eligible companies to spend at least 2% of their average net profits (from the past three years) on social initiatives like education, healthcare, rural development, and environmental sustainability.

CSR bridges gaps in social development that the government alone can’t address. It encourages businesses to contribute to national goals like reducing poverty, improving education, and promoting sustainable growth.

Highlights of CSR Spending in 2023-24

In the financial year 2023-24 (April 2023 to March 2024), companies listed on the National Stock Exchange (NSE) increased their CSR spending by 16%, reaching ₹17,967 crore, up from ₹15,524 crore in 2022-23.

This surge came after three years of relatively flat spending (around ₹14,751 crore to ₹15,524 crore from 2019-20 to 2022-23). The increase was driven by an 18% rise in the average net profits of these companies over the previous three years, as the CSR law mandates spending 2% of this profit.

Top Companies Leading CSR Spending

• HDFC Bank topped the list, spending ₹945.31 crore.
• Reliance Industries followed with ₹900 crore.
• Tata Consultancy Services (TCS) spent ₹827 crore.
• Oil and Natural Gas Corporation (ONGC) contributed ₹634.57 crore.

These four, along with others like Tata Steel (₹580.02 crore), ICICI Bank (₹518.87 crore), and Infosys (₹455.67 crore), were among the top 10 spenders, accounting for 34% of the total CSR expenditure.

Education received the highest share at ₹1,104 crore -> Supporting initiatives like digital literacy, school infrastructure, and scholarships. Healthcare came second with ₹720 crore.

Understanding the CSR Law

India’s CSR law, under Section 135 of the Companies Act, 2013, applies to companies meeting any of these criteria in the previous financial year:

• Net worth of ₹500 crore or more.
• Turnover of ₹1,000 crore or more.
• Net profit of ₹5 crore or more.

These companies must:

• Spend at least 2% of their average net profit (calculated over the past three years) on CSR activities listed in Schedule VII of the Act, such as education, healthcare, poverty eradication, and environmental sustainability.
• Form a CSR Committee with at least three board members (including one independent director) if their CSR spending exceeds ₹50 lakh. In 2023-24, 990 out of 1,028 eligible companies had such committees, and 503 appointed more than three members, showing strong governance.
• If they can’t spend the full amount, transfer the unspent funds to an Unspent CSR Account for use within three years. After that, unspent funds must go to government funds like the PM National Relief Fund or PM CARES Fund.

If funds remain unspent after three years, they must be transferred to government funds. In 2022-23, ₹1,470 crore was reported as “unspent,” but much of it was strategically allocated for future projects. 

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Source: 

INDIAN EXPRESS