Corporate Social Responsibility (CSR) in India

The concept of CSR in India has evolved into a legal obligation under Section 135 of the Companies Act 2013, mandating companies to spend 2% of their average net profit over the last three years on CSR activities. Despite this, questions arise about the genuine impact and motivation behind these contributions.

Current Trends and Issues

• In 2022-23, approximately 24,500 companies contributed around ₹30,000 crore to CSR, predominantly funding education and healthcare.
• Maharashtra and Karnataka were the top beneficiaries, likely due to the presence of large corporate headquarters.
• CSR in India is heavily influenced by promoter-driven priorities rather than national needs, often focusing on personal interests like building institutions in promoters' native areas.

Proposed Changes to CSR Framework

The current fixed percentage model may not suit India's diverse economy. A proposed solution includes a sliding scale for CSR contributions based on profitability:

• Larger corporations could contribute up to 5% of their profits, creating a more equitable system.
• For companies with lower profits, a reduced CSR obligation could prevent financial strain.
• Even non-profitable companies and startups could contribute minimally based on turnover, fostering early social responsibility.

International Models

• Indonesia allows flexibility in CSR contributions without fixing a percentage.
• South Africa integrates CSR with business incentives, tying it to economic policy.
• Nigeria uses industry-specific levies to target CSR efforts toward affected regions.
• Britain emphasizes strong governance norms, requiring businesses to demonstrate societal impact.

Individual Vision and CSR

Prominent examples showcase how personal passion can lead to impactful CSR:

• Franco Cologni's Fondation Cartier promotes traditional craftsmanship.
• Kiran Nadar's museum preserves contemporary art in India.
• Sangita Jindal supports public art projects through JSW Foundation.

While some criticize spending on art and culture amidst poverty, investing in a society's cultural identity is crucial for its holistic progress.

The Role of Tax Policy

Altruism can't be enforced, but strategic tax breaks can encourage genuine CSR participation:

• Brazil and France offer tax incentives for cultural and educational CSR projects.
• In India, linking tax benefits to high-impact areas like climate change and water security could ensure CSR addresses critical national issues.

Future Directions for Indian CSR

To truly make an impact, India's CSR policy should aim to promote:

• Conscious capitalism: where profit serves a greater purpose.
• Social innovation: scaling solutions beyond charitable acts.
• Resilient ecosystems: ensuring sustainable changes beyond donations.

Ultimately, a nation's prosperity is tied to businesses viewing CSR not as an obligation but as an investment in future societal success.