India Inc's CSR spending up by 22 percent in FY16; bulk of it on education and health

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In fiscal year 2015-16, corporate India’s overall spending on corporate social responsibility (CSR) increased by a significant 22 percent to Rs 8,300 crore, according to a study carried out by Crisil Foundation, the CSR arm of the ratings and research company Crisil. The bulk of the money went towards education, skills development, health care and sanitation.

The Companies Act 2013 mandates companies—in both public and private sectors—with profits above a certain size, to spend at least 2 percent of their average net profit of the past three financial years on CSR activities.

Crisil Foundation’s analysis of the 4,887 companies listed on BSE found that 1,505, or 30 percent, of them were required to make the mandatory spending on CSR. Of these 1,505 companies, only 1,158, or 77 percent, actually reported their CSR spend for fiscal 2015-16, compared with 75 percent of those eligible in fiscal 2014-15.

The study found that companies’ purse strings had widened: Overall spending increased from Rs 6,800 crore to Rs 8,300 crore in absolute terms, and average spending also jumped to 1.64 percent. While that’s lower than the mandated 2 percent spend, it is still up by a healthy 29 basis points from the 1.35 percent reported in fiscal 2014-15. To reach the stipulated 2 percent mark, companies would have to spend an additional Rs 1,835 crore.

Interestingly, almost two-thirds of the Rs 8,300 crore, or Rs 5,300 crore, was spent on CSR activities linked to education, skills development, health care and sanitation.

Incidentally, these are also the government’s priority areas. “The private sector ramping up where government spending is low is truly synergistic CSR,” commented Ramraj Pai, president, Crisil Foundation in a statement. “This public-private ‘complementarity’ is great to see because, as a percentage of total government expenditure, India spends significantly less than what other BRICS nations do.”

The 22 percent jump in CSR spending was attributed to companies increasingly (and successfully) taking on large-scale interventions, while also increasingly partnering with non-governmental organisations (NGOs) to help them better execute their planned activities.

While Crisil Foundation found that 133 companies either did not spend on CSR at all or were still in the process of implementing their CSR plans, this too is a marked improvement from the 200 odd companies that were found wanting in fiscal 2014-15.