Rework the CSR framework to incorporate a sliding scale of contributions and tax breaks

'Badalna padega, saahab… warna kuch badal nahi payega!' — Swades

'Koi bhi desh perfect nahi hota, usse behtar banana padta hai!' — Rang De Basanti

Are Indian businesses truly giving back to society, or are they merely ticking a regulatory box? Why do most large Indian companies spend their CSR budgets on projects that reflect the personal interests of their promoter families? And could strategic tax breaks make even the hardest-nosed corporations more generous and genuine towards social causes?

In 2022-23, nearly 24,500 companies contributed around ₹30,000 cr to CSR, with most funds directed towards education and healthcare. Maharashtra and Karnataka were the top two beneficiary states, likely due to the concentration of large corporate headquarters in Maharashtra.

India's CSR framework, under Section 135 of the Companies Act 2013, made social responsibility a legal obligation. Eligible companies must spend 2% of their average net profit from the past three years on CSR activities. This fixed percentage was meant to institutionalise corporate philanthropy, but is it the best model for a country as diverse and complex as India? This does not account for differences in earning capacity, cash flow or industry cycles.

The next evolution for Indian CSR obligations could be linking profitability in a progressive manner. A sliding scale for CSR contributions — where companies pay as low as 0.1% of their profits to up to 5% based on their profit quantum instead of a rigid 2% — could make corporate giving more