Corporate Social Responsibility (CSR) Assessment in India

The Indian government, through Section 135 of the Companies Act, 2013, regulates Corporate Social Responsibility (CSR) activities, requiring qualifying companies to allocate at least 2% of their average net profits over the last three years to CSR initiatives. These regulations apply to companies meeting specific financial thresholds and include a disclosure-driven framework monitored by the company’s Board and statutory auditors. The Board is tasked with planning, executing, and auditing CSR activities, with mandatory disclosure of CSR policies and fund utilization. Auditors must report unspent amounts under the Companies (Auditor’s Report) Order, 2020.

Since the CSR framework’s inception in FY 2014-15, expenditure has been categorized into sectors such as education, healthcare, rural development, and environmental sustainability. A cumulative state-wise and sectoral analysis reveals significant investments, particularly in education and healthcare, reflecting priorities in public welfare. From FY 2020-21 to 2022-23, the state-wise CSR spending by public and private sector entities shows varying contributions across regions. While rural development initiatives are integrated into these expenditures, specific data for rural areas is not maintained separately. Comprehensive details of CSR spending by sector and state are available in annexures provided in the report.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO. 1091
Monday, February 10, 2025/Magha 21, 1946 (Saka)
Assessment of Companies under CSR

QUESTION

1091. Shri Balwant Baswant Wankhade:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

(a) whether the Government has made any assessment of public and private sector companies who have fulfilled their responsibility under Corporate Social Responsibility (CSR) and if so, the details along with the outcome thereof and if not, the reasons therefor;

(b) whether it is mandatory for all the public and private sector companies to spend at least 2 per cent of their average net profit for activities under CSR and if so, the sector-wise details since the inception of the scheme till date; and

(c) the State/UT-wise details of development work carried out/proposed to be carried out in rural areas of the country by companies under CSR during each of the last three years and the current year?

ANSWER

MINISTER OF STATE IN THE MINISTRY OF CORPORATE AFFAIRS AND MINISTER OF STATE

IN THE MINISTRY OF ROAD TRANSPORT AND HIGHWAYS

[SHRI HARSH MALHOTRA]

(a): The legal framework for Corporate Social Responsibility (CSR) has been provided under Section 135 of the Companies Act, 2013 (‘Act’), Schedule VII of the Act and Companies (CSR Policy) Rules, 2014. Schedule VII of the Act indicates the eligible list of activities that can be undertaken by the companies under CSR. CSR is a Board driven process and the Board of the company plans, decides, executes and monitors the CSR activities of the company based on the recommendation of its CSR Committee. The CSR framework is disclosure based and the Board of the company is required to disclose the CSR Policy implemented by the company in its Board report and the Board of the company has to satisfy itself that the funds so disbursed have been utilised for the purposes and in the manner as approved by it.

Contd…2/

Expenditure on CSR activities is required to be audited by the statutory auditors of the company. The Ministry has notified the Companies (Auditor’s Report) Order, 2020, (“CARO, 2020”) applicable from FY 2021-22 which requires auditors to state details of any unspent CSR amount. Thus, through the above framework, it is ensured that the provisions of the Acts and Rules are implemented.

(b): Section 135 of the Act mandates every company having net worth of Rs. 500 crore or more, or turnover of Rs. 1000 crore or more, or net profit of Rs. 5 crore or more during the immediately preceding financial year, to spend at least two percent of the average net profits of the company made over immediately preceding three financial years towards CSR as per the CSR Policy of the Company.

Further, the details of development sector-wise CSR expenditure since inception of the CSR scheme i.e since 2014-15 onwards till date are attached at Annexure-I.

(c) The details of development work carried out in rural areas is not separately maintained. However, the rural development projects have been captured under Development sector-wise CSR expenditure which can be seen at Annexure-I. Furthermore, State-wise CSR expenditure for last three financial years i.e. 2020-21, 2021-22, 2022-23 is attached at Annexure-II.

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Annexure-I

ANNEXURE REFERRED TO IN REPLY OF LOK SABHA UNSTARRED QUESTION NO. 1091 FOR 10.02.2025

(Data upto 31.03.2024) (Source : Corporate Data Management Cell)

*Companies either did not specify the names of sectors or indicated more than one sector where projects were undertaken.

Annexure-II

ANNEXURE REFERRED TO IN REPLY OF LOK SABHA UNSTARRED QUESTION NO. 1091 FOR 10.02.2025

(Data upto 31.03.2024) (Source : Corporate Data Management Cell)

*Companies either did not specify the names of sectors or indicated more than one sector where projects were undertaken.