By Anish Kumar
India’s corporate social responsibility (CSR) regime has matured considerably since Section 135 of the Companies Act, 2013, made such spending mandatory for qualifying companies. What began as a compliance obligation is now a substantial, predictable stream of private development finance. Expenditure has touched a record Rs 40,794 crore according to the latest government data, often cited as proof of a maturing culture of corporate citizenship.
The headline number, however, conceals a more uncomfortable question: Where is this money going? Does it go where it is needed most, or merely where it is easiest to spend?
A map that doesn’t match need
The ministry of corporate affairs’ state-wise filings point to a troubling pattern. CSR spending is heavily concentrated in states with a strong corporate presence, robust infrastructure, and established institutional capacity. Delhi, Maharashtra, Karnataka, and Gujarat draw disproportionately more than poorer, more populous states such as Bihar. The regions receiving the least corporate philanthropy are frequently those with the steepest deficits in education, health, and rural development — precisely the domains CSR is meant to strengthen.
Bihar illustrates the paradox. In 2023-24, it received Rs 260.53 crore, against Rs 6,065.95 crore for Maharashtra. Spread across its people, that is about Rs 20 per person, versus roughly Rs 470 in Maharashtra, a gap of nearly 24 times. Bihar’s spending has more than doubled since 2019-20, but from a very low base. Meanwhile, NITI Aayog’s Multidimensional Poverty Index shows a sharp fall in Bihar’s poverty between 2015-16 and 2019-21, yet 33.76% of its people remain multidimensionally poor, against about 14% nationally. The progress is real, but so is the gap.
Schedule VII of the Companies Act lists education, healthcare, sanitation, livelihood promotion, and rural development as eligible activities, areas where Bihar’s needs are acute. But projects tend to cluster around established urban centres, where companies already have offices, staff, and institutional relationships. The result is a quiet but consequential distortion: Private development finance, instead of correcting regional inequality, ends up reinforcing it.
Not indifference, but incentives
It would be simplistic to call this corporate apathy. Working near existing factories and partners reduces overheads, eases monitoring, and builds genuine understanding of communities. None of this is unreasonable for a company managing shareholder money.
The problem lies not in any individual choice but in the sum of many. No single boardroom decides that Bihar deserves less than Maharashtra. Yet when thousands of companies independently opt for the convenient location, Bihar ends up with far less than its need warrants. This is a textbook policy-design failure: Section 135 created a large pool of private development capital but no mechanism to steer it towards where need is greatest.
The pandemic showed CSR funds can be redirected swiftly when priorities are clear. The challenge is to replicate that responsiveness in ordinary times without turning CSR into a centrally dictated scheme.
Making the money visible
The first reform is better disclosure. State-level figures are too coarse to reveal the geography of giving within a state. Companies should be encouraged, and eventually required, to disclose CSR spending at the district level, with details of beneficiaries, sectors, and, where measurable, outcomes. NITI Aayog’s Aspirational Districts programme already offers a ready framework, with rich district data on health, education, agriculture, and infrastructure. Armed with it, shareholders, regulators, and citizens could ask sharper questions: Where did the company spend, why there, and what changed?
Disclosure should also cover who implements the work. Much CSR money flows through foundations linked to a company’s own promoters or directors. The law does not forbid this, and many such foundations do credible work, but independent verification and public registers naming ultimate recipients would keep the line between public benefit and private convenience bright.
Recognition must evolve too. CSR awards and environmental, social, and governance ratings reward scale, visibility, and polished storytelling more than reach or difficulty. A company investing in an underserved district faces higher costs and greater execution risk. It should be celebrated for taking on the harder task, not penalised for looking less efficient on a spreadsheet.
Bihar as the test case
Bihar need not become a compulsory destination for CSR funds, nor should CSR become an allocation formula dictated from Delhi. But Bihar can serve as a benchmark: A test of whether India’s CSR architecture is closing development gaps or widening them. Boards and CSR committees should examine the geographic footprint of their giving, not just its quantum, and investors and rating agencies should press companies on whether social investment reaches communities that public systems have historically underserved.
India has every reason to celebrate the growth of corporate giving. But the next milestone should not be another record figure in annual reports. It should be credible evidence that more of that money is reaching the people and places that need it most, because that is the difference between spending responsibly and creating lasting social impact.
The writer is National Vice President, Bhartiya Loktantrik Party.
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.