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What is Corporate Social Responsibility and how much money is spent on it in India

27-NOV-2017 04:08
    CSR Activity in India

    Meaning of Corporate Social Responsibility:-
    As we know, companies use natural resources to create a product or service which increases the profit of the big corporate houses. Industrial activities pollute the environment by releasing injurious gases/waste in the environment.
    Unfortunately common men of the society has to bear the actual cost of this bad pollution in terms of diseases like Bronchitis, Non Communicable Diseases, polluted air and water etc. but common men do not receive any compensation from the corporate houses in return of these diseases. That is why, it was made mandatory for companies all over the world including India that they should spend some part of their income for the welfare of affected people or weaker section of the society. It is called Corporate Social Responsibility (CSR).

    csr benefits in india
    Image source:LinkedIn
    Who comes in the purview of Corporate Social Responsibility in India?
    Rules of Corporate Social Responsibility (CSR) are in force in India since April 1, 2014. According to these rules, companies which have an annual net worth of Rs.500 crore or annual income of Rs.1000 crore or an annual profit of Rs. 5 crore, are required to spend on CSR activities. This expenditure should be at least 2% of the average profit of three years. According to the CSR rules, the provisions of the CSR are not applicable to Indian companies only, but it is also applicable to the foreign company's branch in India and the project office of the foreign company.

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    What activities can be done in C.S.R.
    Under C.S.R. activities companies have to compulsorily take part in various activities which are necessary for the welfare of the people of the backward society.
    These activities are covered under the Corporate Social Responsibility:
    1. To eliminate hunger, poverty and malnutrition
    2. Promote education
    3. Improve maternal and child health
    4. Ensuring environmental sustainability
    5. Measures for the benefit of the Armed Forces
    6. Promote sports activities
    7. Protection of National Heritage
    8. Contribution to Prime Minister's National Relief fund
    9. Developmental activities in slum area
    10. Construction of toilets in schools
    How much money is on spent on the CSR activities in India?
    According to the data released the Ministry of Company Affairs, in the year 2015-16, Rs.9822 crore was spent on CSR activities, which is 11.5% more than the previous year. In the year 2015-16; there are 5097 companies covered under the CSR activities out of which only 2690 had spent on CSR activities. The top 10 spent Rs.3207 crores in C.S.R. activities which is 33% of the total expenditure of the year.

    csr expenditure top 10 spenders in india
    Image source:Newslaundry

    How much money is spent on different sectors under the CSR?
    1. Health and Medicine -        Rs. 3117 cr.
    2. Education -                      Rs. 3073 cr.
    3. Rural Development -           Rs. 1051 cr.
    4. Environment protection -    Rs. 923 cr.
    5. Clean India Fund -             Rs. 355 cr.
    According to a recent survey, 99% of Indian companies have followed the CSR rules in 2016. In addition to India only Japan and England have touched 99% figure.

    Promoting the welfare of the lower classes of society through the CSR activities is like win-win situation for both the companies and the government. When a company spends money on CSR activities it receives a wide attention of the consumers, who purchases more products of the company and on the other hand it reduces the burden of the government for creating a better infrastructure in the country.

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    DISCLAIMER: JPL and its affiliates shall have no liability for any views, thoughts and comments expressed on this article.

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