SAHAYI - CENTRE FOR COLLECTIVE LEARNING AND ACTION
CSR COMPLIANCE
The introduction of mandatory CSR spending by the corporate sector in the year 2014 by the Government of India was an innovative and progressive legislation and an unprecedented legal measure anywhere in the world. Countries around the world are curious about the outcome of the Indian corporate experiment in sustainable development.
CSR Non-compliance
Glaring non-compliance of CSR provisions, with zero CSR spending by a major chunk of the corporates, remains a reality. Over 55% of the CSR eligible companies had not been complying with the CSR rules until FY 2019 and had zero CSR spending as reported by the Ministry of Corporate Affairs. However, the number of companies with zero CSR spending came down to 21.10% in FY 2022
TABLE 4: CSR COMPLIANCE: COMPANIES WITH ZERO CSR SPENDING
Year | Total No. of companies with CSR obligation | Companies with Zero CSR Spending (Nos.) | Per cent (%) of companies with Zero CSR Spending |
|---|---|---|---|
2017-18 | 21525 | 11748 | 54.58 |
2018-19 | 25181 | 13977 | 55.51 |
2019-20 | 22985 | 10436 | 45.4 |
2020-21 | 20840 | 5888 | 28.25 |
2021-22 | 18623 | 3929 | 21.1 |
Source: Ministry of Corporate Affairs
Shortfall in CSR Spending
Another form of non-compliance is the shortfall in the CSR spending of companies in relation to their CSR obligations. Over 16% of CSR eligible companies have been spending less on their CSR projects than their obligatory CSR budget in FY 2022.
TABLE 5: EXTENT OF CSR COMPLIANCE AMONG INDIAN COMPANIES
Year | Total No. of CSR Eligible Companies | Companies Spending more than the prescribed CSR (Nos.) | Companies Spending exactly the prescribed CSR (Nos.) | Total no. of companies fully complying with CSR spending norms | Companies fully complying with CSR spending norms – % |
|---|---|---|---|---|---|
2017-18 | 21,525 | 4,947 | 1,066 | 6,013 | 27.9 |
2018-19 | 25,181 | 6,333 | 744 | 7,077 | 28.1 |
2019-20 | 22,985 | 7,004 | 810 | 7,814 | 34 |
2020-21 | 20,840 | 9,935 | 1,511 | 11,446 | 54.9 |
2021-22 | 18,623 | 10,443 | 1,188 | 11,631 | 62.5 |
Spending More than the Prescribed Minimum
However, the redeeming fact is that there are companies which spend more than the minimum two percent (2%) profit on CSR programmes and that the number of such companies has been increasing over the years. Companies spending more than the prescribed CSR obligation has increased from 4,947 in FY 2018 to 10,443 in FY 2022. Considering the total eligible companies, the increase has been from 22.98% in FY 2018 to 56.08% in FY 2022.
Extent of CSR Compliance among Companies
Companies fully complying with CSR norms increased to 54.9% of the total in FY 2021 and to 62.5% in FY 2022. Among the 37.5% of the companies that do not comply with the CSR regulations, 21% have made zero CSR spending during FY 2022 and the remaining (16.5%) companies spent less than their obligatory CSR budget.