India Inc's CSR spends over 1 trillion since mandatory law in FY15: Crisil

Majority of money spent in last three years; In Covid-dominated FY21, the amount is likely to have crossed Rs 22,000 cr

Indian companies have likely spent over Rs 1 trillion on corporate social responsibility (CSR) projects since a mandatory law came into effect.

The amount for the latest year (FY21) is likely to have crossed Rs 22,000 crore, according to estimates from rating agency Crisil. This would be the highest on record. The Ministry of Corporate Affairs made it mandatory for companies to spend two per cent of their profits on CSR projects with effect from 2014-15 (FY15). The agency estimated that listed companies would have spent around two-thirds of the amount. The rest would come from unlisted companies. Over 50 per cent of the spends came in the last three years. The Covid-19 pandemic has emerged as a major focus area in the last two years.

“Given the expectations of a third wave, the probability of diverting more funds during this fiscal seems imminent. Thus, it remains to be seen how long the momentum holds,” said Maya Vengurlekar, chief operating officer, Crisil Foundation in a statement.

“More changes may be in order this fiscal as new rules proposed by the Ministry of Corporate Affairs have kicked in from April, 2021,” added Nitesh Jain, Director, Crisil Ratings. The government has issued notifications urging companies to support Covid-19 relief work, awareness and vaccination drives.

Manufacturing, energy and financial services contributed more than 60 per cent of the spending. Public sector entities accounted for seven per cent of the eligible companies but contributed around 32 per cent of the total spends.  

The top priorities for Indian companies were education and skill development, and healthcare and sanitation.

“Of the total Covid-19 spend….(88 per cent)  was contribution towards the PM Cares Fund (Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund), while the remaining…(12 per cent) ….included other relief funds, masks, sanitisers, food rations, and supplies,” it said.

The top ten states accounted for 96 per cent of the CSR in FY20 similar to a trend seen in previous years. Maharashtra had the highest amount. It alone accounted for 46.5 per cent of the national CSR pie. The National Capital Territory of Delhi was second with 18.7 per cent.

The report also noted a preference for implementing agencies to carry out CSR projects. The proportion of companies using implementing agencies has hit 78 per cent, according to the report. The trend seemed to hold especially true for larger companies.  Around 95 per cent of companies with sales of Rs.10,000 crore or more used such agencies. The number was 74 per cent for companies with net sales of Rs.99 crore or below.