NEW DELHI: India’s Corporate Social Responsibility (CSR) investments are geographically skewed, with 60% directed towards only six states, while underdeveloped regions receive just 20% of the total funds.
A new report by the Developmental Intelligence Unit (DIU) has found that CSR fund investments lack transparency, often duplicate government schemes, and involve minimal community participation in project design.
DIU is a joint initiative of the non-profit Transform Rural India and Sambodhi Research. Its report, “Investing in Tomorrow: Need for realigning CSR spends with status of development in districts”, mapped India’s CSR fund investment patterns.
In 2022–23, CSR expenditure in India reached Rs 29,989.92 crore, registering a 12.8% growth over the previous year. However, this growth masks a deep structural imbalance in the geographical distribution of CSR funds. Donors preferred to invest in tier headquarters of manufacturing or mining unit locations.
As a result, Maharashtra, Tamil Nadu, Karnataka, Andhra Pradesh, Delhi, and Gujarat accounted for 60% of CSR spending, while Aspirational Districts (per NITI Aayog) received less than 20% of the total CSR pool.
These aspirational districts are mostly in low-income states such as Jharkhand, Chhattisgarh, Bihar, Odisha, Madhya Pradesh, and the Northeastern states. These regions remain underfunded despite their greater developmental needs.
“This geographic misalignment dilutes the redistributive potential of CSR and fails to address the needs of India's most underserved populations,” the report noted.
Under Section 135 of the Companies Act 2013, Indian corporates must spend a portion of their profits on social development. However, the law’s “local area preference” clause has been misinterpreted as mandatory rather than discretionary. This has led corporates to spend CSR budgets within the periphery of their business operations, contributing to geographical disparity.
The report also highlighted that most CSR fund allocations lack alignment with India’s commitment to meeting Sustainable Development Goal (SDG) targets by 2030. There is also a lack of impact assessment, with most corporations relying on output indicators (e.g., number of people trained, number of toilets built) instead of impact metrics (e.g., long-term employment, reduction in open defecation).
“Consequently, funding decisions may continue based on legacy projects or board preferences rather than data-driven evidence,” it said.
Further, CSR funds are often used to duplicate government schemes instead of adopting innovative approaches to address last-mile gaps. Investments frequently go to mid-day meal programmes, sanitation drives, and basic skill development — all of which mirror ongoing government initiatives.
Finally, the top-down approach in allocating funds results in limited community participation and a lack of nuanced understanding of local needs, aspirations, or systemic gaps.