Mains Practice Questions

Introduction

Corporate Social Responsibility (CSR) is a business model where companies voluntarily integrate social, environmental, and ethical considerations into their operations and interactions with stakeholders.CSR mandatory provisions under Section 135 of the Companies Act, 2013, became effective from April 1, 2014 in India.

Body

The Significance of CSR Activities in India:

• Educational Opportunities and Skill Development: Education and skill development continues to get the highest amount under companies' CSR expenditure with Rs 10,085 crore, making it a significant area of impact
• Enhancement of Community Infrastructure: Vedanta’s CSR efforts including 'Swasth Gaon Abhiyaan', provides end-to- end healthcare services across 1,000 villages, enhancing sanitation and reducing health risks.
• Boosting Economic Self-Sufficiency and Livelihood Programs: Hindustan Unilever’s ‘Prabhat’ initiative focuses on rural women’s empowerment by training them in entrepreneurial skills.
• Environmental Sustainability and Climate Action: Mahindra Group has been planting one million trees every year which has boosted its brand value as a socially responsible corporation, attracting greater investor confidence.
• Alignment with Sustainable Development Goals: As of 2023, about 60% of CSR projects in India directly target Sustainable Development Goals (Health, Education and Environment), marking a trend of integrating global development goals with local action

Major Issues Related to CSR in India:

• Implementation Gaps & Project Timeline Mismanagement: Companies often rush to complete CSR projects within shortened timelines due to delayed board approvals and budget allocations.
• Uneven Geographic Distribution: According to 2023 data, Maharashtra, Gujarat, and Karnataka received a major chunk of total CSR funds.
  • Despite the government advocating CSR investment in Aspirational Districts, only about 2.15% of the total CSR during 2014-22 has been invested in these districts
• Monitoring & Evaluation Challenges: The current framework emphasizes quantitative metrics over qualitative impact assessment.
• Compliance Over Impact: The tendency to prefer safe, established projects over innovative solutions with a minor share of CSR projects involved in innovative approaches or risk-taking.
  • This compliance-focused approach limits CSR's potential for transformative social impact.

Measures to Enhance the Effectiveness of CSR in India :

• Strategic Long-term Planning Framework: CSR projects must shift from annual cycles to mandatory 3-5 year commitments, ensuring sustained impact and proper implementation.
• Digital Integration & Smart Monitoring System: Implementation of an integrated digital platform connecting all stakeholders - companies, NGOs, beneficiaries, and government agencies - through a single interface.
• Professional Management & Capacity Building: Establish dedicated CSR departments led by sector specialists and supported by professional project managers with domain expertise.
• Geographic Integration & Community Ownership: Implement cluster-based development approaches focusing on comprehensive transformation of specific geographic areas rather than scattered interventions.
• Impact Measurement & Sustainability Framework: Create comprehensive impact measurement systems combining quantitative metrics with qualitative assessments of social change.

Conclusion

To enhance CSR's impact, India needs long-term planning, digital integration, professional management, collaborative implementation, geographical focus, and robust impact measurement. By addressing these issues, India can ensure CSR contributes meaningfully to sustainable development.