By any measure, India’s corporate social responsibility (CSR) regime is one of the most interventionist in the world. A decade after Section 135 of the Companies Act 2013 made CSR spending mandatory, the government and civil society continue to demand more—more money, more data, more direction, more accountability. The latest salvo comes in the form of a detailed study titled
“Investing in Tomorrow: Need for Realigning CSR Spends with Status of Development in Districts,” (accessible here:
https://www.trif.in/investing-in-tomorrow/) jointly published by the Transform Rural India Foundation (TRI) and the Independent Research Consortium (IRC) which calls for CSR allocation to be aligned with regional deprivation metrics using a proprietary rural quality of life (RQOL) index.
The report is data-rich, well-visualised and rigorously indexed; but it is also divorced from on-ground realities of what CSR is, how companies operate and the burden already imposed on the private sector. The central flaw of the report lies not in its numbers but in its foundational premise: that CSR is a redistributive instrument of public policy that can be planned and enforced like a five-year plan. In doing so, it reveals a troubling drift toward pushing for bureaucratic overreach cloaked in the language of evidence-based reform.
CSR is a Tax—With Strings Attached
Let us be clear: CSR in India is a post-tax imposition, not a voluntary act of corporate conscience. Companies that cross thresholds of net worth, turnover or profits are required to spend 2% of their average post-tax profit from the previous three years on eligible activities. The term ‘responsibility’ suggests moral obligation, but this is a statutory burden with penal consequences for non-compliance.
And yet, unlike a direct tax, where the government collects and spends the money, CSR mandates that companies also design, implement, monitor, report and, sometimes, defend their spending. It is a devolution of State responsibility onto entities whose core competency and primary interest lie elsewhere. Listed companies are primarily answerable to shareholders and struggle to meet investor expectations from one quarter to another. If this report is taken to its logical conclusion, a steel company will have to find rural malnutrition hotspots, an IT firm may need to worry about groundwater sustainability and an engine manufacturer will have to grapple with dropout rates in tribal schools for the 2% mandatory CSR spend.
To expect private companies—big and small, seasoned or new—to navigate complex social terrain with the precision of NITI Aayog is an unreasonable ask. The TRI-IRC report implicitly demands exactly that. If adopted as policy, it may end up pushing companies to play safe, by simply donating to government-controlled funds like PM CARES, or worse, gaming the system with cookie-cutter compliance projects devoid of real impact.
In our experience, companies already struggle to find non-government organisations (NGOs) that are not only doing genuine work, but are able to deliver projects they have signed up for with an audited compliance certificate. The strict cap on administrative costs also makes a lot of work that requires in-house supervision unviable and for NGOs, even when CSR funding is available. Only large NGOs with large funds, perhaps, find CSR funding worthwhile by contracting out the work to implementing agencies.
The Geography Trap: Are Companies Social Planners Now?
The TRI-IRC report highlights a legitimate issue: the geographical skew of CSR spending toward industrialised states such as Maharashtra, Tamil Nadu, Karnataka and Gujarat. It shows that these six states receive 60% of India’s CSR funds, while the least developed states get less than 20%.
To illustrate this misalignment, the report introduces the RQOL Index, a composite metric developed by TRI’s data analytics unit, the Development Intelligence Unit (DIU). The index is based on 72 indicators sourced from 13 public databases and covers nine pillars: agriculture, employment, education, gender, governance, health and nutrition, infrastructure, social security and sustainability.
Each of the 707 rural districts studied was placed into high, moderate, or low categories within their respective states and the report then matched this with five-year CSR spending patterns in rural-focused sectors like education, sanitation, drinking water and livelihood.
The report’s conclusion is that only 30% of districts show a ‘desirable’ match between development need and CSR flows, while 70% display varying levels of misalignment. One example cited is Balrampur district in Uttar Pradesh, which ranks among the lowest in rural development within the state but received just Rs6 crore in CSR funds over five years—an average of Rs23.49 per capita.
But this observation is neither new nor surprising. CSR spending naturally clusters around operational footprints. Companies spend where they are located, not merely out of convenience, but also because Section 135 of the Companies Act says they should ‘prefer’ local areas. This is not ‘personal’ or ‘selfish’ as the report hints; it is simply pragmatic.
Take a mining company in Odisha or a refinery in Gujarat. It is logistically easier, reputationally safer and operationally synergistic to support projects nearby, where the company already has presence, staff and stakeholder engagement channels. The report criticises this as a ‘misinterpretation’ of the Act’s intent. But the law doesn’t ban spending in one’s own backyard; it encourages it.
The deeper issue is this: Are we asking companies to become development state proxies? Should Infosys be blamed for not fixing tribal malnutrition in Balrampur, in UP? The focus on geographic redistribution in the report ignores operational constraints, legal interpretation, human bandwidth and, most importantly, that CSR is not the core function of companies.
Constraints vs Expectations: A Corporate Reality Check
The report laments that 70% of Indian companies still lack a formal CSR strategy. But perhaps that is because companies were never set up to be micro-NGOs. For many, CSR is an enforced compliance burden, not an institutional priority. The mandate doesn’t come with tax breaks, government hand-holding, or streamlined clearances—it comes with scrutiny and risk.
As CSR norms get more demanding, companies will increasingly err on the side of low-risk, high-visibility projects. Education scholarships, skill development programmes school refurbishments—preferably in areas where they have staff and control.
The report urges that CSR should align with national SDG goals and suggests that funding must correlate inversely with development—i.e., less developed areas should get more CSR money. This may sound ideal in theory but translates into a planning and logistical nightmare in execution.
Even assuming a company accepts this framework, how is it expected to choose from 707 districts across India, calculate per capita development scores, evaluate sectoral needs, avoid duplication with government schemes, conduct impact assessments, and still stay within legal boundaries that prohibit spending in the 'normal course of business'?
Don’t Weaponise CSR as a Proxy for State Failure
Behind the rhetoric of 'evidence-based planning' is a silent confession: that government schemes have failed to deliver, and the state now wants companies to fill the breach. The report rightly flags duplication of CSR efforts with existing schemes such as mid-day meals, sanitation drives, classroom renovation, but doesn't ask the obvious question: Why aren’t these schemes working in the first place?
Instead, it implies that the private sector should take the lead, not just in funding, but in designing better schemes. This flips the script. The Indian State would then by outsourcing its development mandate to private companies without surrendering control. In CSR, companies carry the cost and risk, but the government retains the moral authority to critique their choices.
Worse, if they get it 'wrong' (as per reports like this), they are blamed for insensitivity, inefficiency, or poor vision. It is a lose-lose situation.
Perils of Over-engineering CSR
The TRI-IRC report is meticulous in its construction, but this rigour masks a basic policy overreach. Asking to match rural development indicators with CSR flows at district level is unworkable unless CSR is converted into a nationalised fund-pool administered by the government, with companies merely contributing money. Surely, nobody wants that, certainly not NGOs.
Moreover that is not the law. Nor should it be. CSR was meant to nudge companies to voluntarily engage in nation-building, not bind them into a command-and-control framework of social engineering.
At its core, the report reflects a fundamental mistrust of corporate judgement. It assumes that unless guided by government metrics and 'evidence', companies will act irrationally or selfishly. But, in fact, companies know their risks better, are more accountable to shareholders and have greater incentive to support tangible impact—if only they’re allowed the autonomy to do so.
The Real Risk: Retreating into Safe Havens
If reports like these become blueprints for policy, we will see a quiet retreat from genuine CSR innovation. Companies will write cheques to government-controlled funds or outsource CSR entirely to turnkey vendors with templated, box-ticking projects. Rural India will be no better off. And the great promise of CSR as a bridge between business expertise and social good will remain unfulfilled.
India definitely needs CSR, but not as a shadow tax burdened by red-tape. Let companies choose, experiment, fail and learn. Let the State fix its own delivery gaps. And let’s not forget: corporate philanthropy is a supplement, not a substitute, for public governance. It simply cannot be the core focus of private enterprise.
Assuming that govt. doesn't excel at impactful welfare coupled with vested interests, CSR is a great tool to give corporate India the flexibility to spend gaining free publicity in the bargain fir their obligated benevolence.
Frankly schools are the most neglected aspect in rural India and dome parts of urban India. A school is meant to inspire curiosity in kids. It costs a fair amount of money to impart practicality in education. Having models of the human body, a car, an ICE, EV BMS, solar system, earth(globe) etc. You get the picture. Then you have educational field trips. The list is long.
The job of the govt. of the day is define possible areas of impactful development over a period of time. The final decision must and should always rest with the corporates.