Impact of CSR funds ‘not widely felt’ despite jump in spending: Ministry of Corporate Affairs

economictimes.indiatimes.com:

Ministry of Corporate Affairs (MCA) has flagged the limited impact of corporate social responsibility (CSR) initiatives despite a spike in such spending in recent years, and called on India Inc to adopt a long-term approach “to yield productive results”. In a newsletter dated June 30, meant for various stakeholders, the ministry said the CSR spending stood at Rs 26,210 crore in FY21, having grown 80% from FY16.

“However, the impact of the CSR funds is not widely felt and there is a need to enhance the visibility as well as impact of these invested funds,” it said in the newsletter reviewed by ET. It is important to execute CSR efforts strategically, “with the right balance of capital investments and operational expenses”, it added.

The MCA has also expressed concerns over wide regional disparity in the deployment of the CSR funds and called on companies to balance their area preference with national priorities. According to rules, companies of a certain size are required to spend, annually, at least 2% of their average net profits made in the previous three financial years.

The MCA has also highlighted the need to ensure the initiatives undertaken become self-sustaining so that the CSR programmes can run seamlessly without being a burden on the companies themselves. “The emphasis should be on creating an appropriate structure for CSR, ensuring that the funds go towards the well-being of the community.

Further, the highest quality of risk management framework needs to be adopted, so as to make the CSR projects sustainable,” it said. As for regional disparity, the ministry pointed out that just ten states--including industrial ones such as Maharashtra, Gujarat, Karnataka and Andhra Pradesh--grabbed over 44% of the CSR