CSR Fund Utilization in India: 2020-23 Overview

New Delhi, November 25, 2024 – The Ministry of Corporate Affairs presented an overview of Corporate Social Responsibility (CSR) fund utilization in India during the last three financial years in response to an unstarred question raised in the Lok Sabha. The data highlighted state-wise and sector-wise expenditures, as well as the steps taken to ensure adherence to CSR rules and guidelines.

Key Findings on CSR Expenditure

According to the Ministry, a total of ₹26,210.95 crores, ₹26,616.30 crores, and ₹29,987.92 crores were spent on CSR activities in FY 2020-21, FY 2021-22, and FY 2022-23, respectively. Major areas of spending included:

• Education: ₹10,085.78 crores in FY 2022-23.
• Healthcare: ₹6,830.60 crores in FY 2022-23.
• Environmental Sustainability: ₹1,960.13 crores in FY 2022-23.

State-wise, Maharashtra emerged as the top recipient of CSR funds, with ₹5,497.32 crores in FY 2022-23, followed by Karnataka and Delhi.

CSR Fund Utilization Practices

The Ministry clarified that under Rule 2(1)(d)(iv) of the Companies (CSR Policy) Rules, 2014, CSR activities benefiting only employees do not qualify as CSR. However, companies may contribute to general public welfare activities such as:

• Beautification of public areas.
• Providing better facilities in schools and hospitals.
• Enhancing transportation and basic infrastructure.

Steps to Monitor and Ensure Compliance

To promote proper utilization of CSR funds, the government has implemented several measures:

1. Mandatory CSR Committee: Eligible companies must establish a CSR Committee comprising three or more directors. The committee is tasked with drafting CSR policies and ensuring activities align with Schedule VII of the Companies Act, 2013.
2. Board Oversight: The board of directors approves CSR activities and monitors fund disbursement, ensuring expenditures are properly certified by financial officers.
3. Auditor’s Report: As per the Companies (Auditor’s Report) Order, 2020 (CARO, 2020), auditors must disclose unspent CSR amounts.
4. Public Transparency: Companies are required to publish CSR policies, projects, and annual reports on their websites for public access.

Action Against Non-Compliance

The Ministry reiterated that violations of CSR provisions are subject to scrutiny and appropriate action under the Companies Act, 2013. Legal provisions such as mandatory disclosures, statutory audits, and public reporting aim to create a transparent framework for CSR.

Sectoral and Regional Highlights

The data revealed significant variances in CSR spending across sectors and states:

• Healthcare and Education: Consistently received the highest allocations.
• Environmental Sustainability: Notable growth in expenditure, reaching ₹580.37 crores in FY 2022-23.
• PAN India Projects: A substantial portion of CSR funds, amounting to ₹6,060.98 crores in FY 2022-23, was allocated to projects spanning multiple states.

Unspent CSR Funds

To address unspent CSR obligations, the Ministry has mandated stricter reporting through CARO, 2020. Companies failing to utilize allocated CSR funds must report the reasons and outline plans for future expenditure.

Looking Ahead

The government remains committed to ensuring that CSR activities align with national priorities. By strengthening accountability mechanisms, such as impact assessments and detailed action plans, the Ministry aims to enhance the impact and efficiency of CSR initiatives across the country.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
LOK SABHA

UNSTARRED QUESTION NO. 197

ANSWERED ON MONDAY, NOVEMBER 25, 2024

UTILISATION OF CSR FUNDS

QUESTION

197. SHRI Y S AVINASH REDDY:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

(a) the details of the funds utilised and unutilised along with the major activities/ programmes undertaken by various public sector and private sector companies under Corporate Social Responsibility (CSR) during the last three years in the country, State/UT-wise including Andhra Pradesh;

(b) whether some companies utilise CSR funds for their employees, transport facilities, beautification of the area, providing better facilities in schools and hospitals and maintaining public relations;

(c) if so, the details thereof; and

(d) the steps taken/proposed to be taken by the Government to ensure proper utilisation of CSR funds as per rules?

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) : On the basis of annual filings made by Companies in the MCA21 registry, sector-wise & state-wise Corporate Social Responsibility (CSR) spent by all public as well as private sector companies during the last three financial years (FY) i.e 2020-21, 2021-22 & 2022-23 is attached as Annexure-I & Annexure-II respectively. Further, w.r.t unutilised CSR obligation 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.

(b) & (c): Rule 2 (1) (d) (iv) of the Companies (CSR Policy) Rules, 2014 prescribes that CSR projects/ programmes/ activities that benefit only the employees of a company shall not be considered as CSR activities. The legal framework for 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 Companies Act, 2013 (Act) enlists areas or activities that may be undertaken by a company as CSR.

(d) : Every eligible company has to constitute a CSR Committee comprising three or more directors. The Committee shall formulate and recommend the CSR policy which indicates the activities to be undertaken by the company in area or subject specified in Schedule VII. 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 Board of the company is also required to disclose the CSR Policy implemented by the company in its Board report. Under Rule 4(5) of the Companies (CSR Policy) Rules, 2014, 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, and the Chief Financial Officer or the person responsible for financial management shall certify to the effect. The details of CSR activities, Impact Assessment etc. are required to be reported by all the companies in the ‘Annual Report on CSR’ including annual action plan on CSR which is part of the Company’s Board Report. The Board’s Report including Annual Report on CSR is an important tool of communication by the Board of a company to its shareholders. Further, those companies who have their websites are required to make disclosures such as composition of CSR Committee, CSR Policy and CSR projects approved by Board on their website for public access and transparency.

Thus, the corporate governance framework along with the existing legal provisions such as mandatory disclosures, accountability of the CSR Committee and the Board, provisions for statutory audit of accounts of the company etc. provide adequate safeguards for CSR activities implemented by the companies. The CSR framework is disclosure based and expenditure on CSR activities is required to be audited by the statutory auditors of the company. The CSR related disclosures are filed by the companies in the MCA 21 portal. Whenever violation of CSR provisions is reported, action against such non-compliant Companies is initiated as per provisions of the Act after due examination of records and following due process of law.

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Annexure-I

ANNEXURE REFERED TO IN REPLY OF LOK SABHA UNSTARRED QUESTION NO. 197 FOR 25.11.2024

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

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

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Annexure-II

ANNEXURE REFERED TO IN REPLY OF LOK SABHA UNSTARRED QUESTION NO. 197 FOR 25.11.2024

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

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

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