Boom in CSR spending spurs India' march to economic diversification

Boom in CSR spending spurs India’s march to economic diversification, sustainability

Corporate Social Responsibility (CSR) is a new normal for Indian corporate houses, credit to an amendment to the Companies Act, 2013 by the government which made India the first country in the world to make CSR activities mandatory.
Since then, corporate houses have continuously increased their spending for the welfare of the citizens of the country. According to a Ministry of Corporate Affairs’ (MCA) newsletter dated June 30, CSR spending in FY21 amounted to Rs 26,210 crore, marking an impressive 80 per cent increase compared to FY16.
The massive increase over the period is not just a numerical milestone but a testament to the growing commitment of individuals, corporations among others towards fostering sustainable growth and economic potential.

Beyond mere compliance under Section 135 of the Companies Act, 2013, of allocating a minimum of 2 per cent of their average net profits from the preceding three fiscal years as annual expenditure under CSR, the increase showcases that it not just benefits communities through infrastructure development and skill enhancement but also aligns with the nation’s goals of sustainability and inclusive growth.
Growing awareness is one of the major reasons that firms are realising the importance of contributing to society and the environment. According to data by the Ministry of Corporate Affairs (MCA), although the environment category includes animal welfare and conservation of resources, environmental sustainability made up over 83 per cent of the CSR spending in the category in FY22.
Walking on similar lines, Sachin Manchanda who advocates for transformative change in society, said that the his foundation has been working to help underprivileged get better education and employment opportunities.

“The foundation has long been involved in community works which include distributing sewing machines and blankets for the homeless while equally focusing on scholarships for the students to help them join the mainstream,” he said.
He added that as awareness regarding social and environmental issues grows, companies are inclined to invest in projects that address the social concerns. and make a meaningful impact on individuals’ lives.
Creating Jobs
The surge in CSR spending is not just fostering economic growth by creating jobs but is also improving infrastructure and promoting education. These developments, in turn, stimulate demand for real estate and boost the overall economy, he added. “Corporate houses via their CSR activities are consistently empowering the communities through healthcare, education, as well as digital skill development to create job opportunities for our youth, in line with PM Modi’s vision for a Digital India,” Mohit Goel, MD, Omaxe Group, said.
Such activities exemplify how businesses can go beyond profit-making to be agents of positive changes and contribute to the development and environmental preservation.