Corporate Social Responsibility (CSR) in India: A Step Towards Inclusive Growth

Introduction

Corporate Social Responsibility (CSR) has emerged as a crucial component of the corporate landscape in India. With the growing realization that businesses have a duty beyond profit-making, CSR has become a medium through which companies contribute to social, environmental, and economic development. In India, CSR is not just a voluntary endeavor but a legal mandate, making it one of the few countries in the world to legislate corporate responsibility.

The Legal Framework

The foundation for CSR in India was laid with the introduction of the Companies Act, 2013. Under Section 135 of the Act, companies with a net worth of ₹500 crore or more, or a turnover of ₹1,000 crore or more, or a net profit of ₹5 crore or more during a financial year are required to spend at least 2% of their average net profit of the preceding three years on CSR activities.

The Act also mandates the formation of a CSR committee and the publication of CSR reports to ensure transparency and accountability. This legal framework has significantly increased corporate contributions to social causes across the country.

Areas of CSR Activity

Companies can direct their CSR funds towards a wide array of sectors outlined in Schedule VII of the Companies Act. These include:

• Eradicating hunger and poverty

• Promoting education and gender equality

• Environmental sustainability

• Skill development and vocational training

• Healthcare and sanitation

• Rural development projects

• Protection of national heritage, art, and culture

Over the years, education, healthcare, and environment have emerged as the most popular areas for CSR investment.

Impact and Challenges

CSR initiatives in India have led to notable improvements in community development, infrastructure, and access to essential services in underprivileged areas. Several companies have partnered with NGOs, government agencies, and local communities to implement impactful programs.

However, the implementation of CSR faces several challenges:

• Lack of clear strategy or alignment with core business values

• Limited participation by small and medium enterprises (SMEs)

• Inefficient monitoring and evaluation mechanisms

• Risk of tokenism, where CSR is treated as a compliance checkbox rather than a genuine commitment

Emerging Trends

1. Strategic CSR: Companies are increasingly aligning CSR activities with their business goals, creating shared value for both society and the company.

2. Sustainability and ESG focus: CSR is being integrated with broader Environmental, Social, and Governance (ESG) frameworks.

3. Technology-driven impact: Use of digital tools and data analytics is enhancing the reach and effectiveness of CSR programs.

4. Employee Engagement: Companies are involving employees in CSR initiatives, fostering a sense of purpose and community.

Conclusion

Corporate Social Responsibility in India is evolving from an obligation to an opportunity — one that allows businesses to play a transformative role in nation-building. As awareness and expectations grow, companies must move beyond compliance and embrace CSR as a core component of their identity and operations. With sustained effort, CSR can become a powerful driver of inclusive and sustainable growth in India.

Aradhna Singh
Ca Intern

TAXAJ Corporate Services LLP