60% of CSR funds go to top 6 states: New study points to unequal spending

Mumbai: Though Indian corporates spent a record Rs 34,909 crore on Corporate Social Responsibility (CSR) initiatives in 2024 - a 13 per cent rise from the previous year, however, it is not clear if these funds are being distributed fairly across states and districts.

Underlining these concerns, a new study sheds light on the problem that most CSR spending is directed to six of the most industrialised and high-GDP states. India’s most underdeveloped districts, on the other hand, are receiving only a small fraction.

According to Development Intelligence Unit’s report titled ‘Investing in Tomorrow: Need for realigning CSR spends with district development,’ released during the Fifth Edition of the India Rural Colloquy, there is a major misalignment between CSR fund distribution and the actual development needs of rural districts. While states such as Maharashtra, Tamil Nadu, Karnataka, Andhra Pradesh, Gujarat and Delhi collectively account for over 60 per cent of CSR funds, the remaining states are not getting an adequate share.

DIU is a joint enterprise of Transform Rural India (TRI) and Sambodhi Research and Communications.

One major reason for this situation, according to the report, is that companies are focusing their spending in areas close to their operations, often due to a misunderstanding that the law mandates such local investments.

“Invest money where it’s needed, not necessarily where your factory sits. We have found that too often too much CSR funding is given on the basis of convenience and not on the basis of need. This needs to change for those in need to be actually impacted by CSR funds,” said Sandeep Ghosh, Director, DIU, in a statement.

The report provides a comprehensive analysis of CSR fund-distribution and the development needs of rural districts. The findings are based on a data-driven methodology that contrasts district-level CSR allocations over five years (2018-2023) with the quality of life in rural areas, measured through a Rural Quality of Life (RQOL) Index.

The index, developed by the DIU, uses 69 indicators from 13 official datasets across nine key development areas such as health, education, infrastructure, employment, gender and sustainability.

The analysis also shows that only 30 percent of eligible rural districts receive CSR support that aligns with their development needs. About 23 per cent show a complete mismatch, while 47 per cent are only partially aligned. This indicates that companies are guided more by convenience or compliance than by data, evidence-based approaches, or development priorities.

Other major findings:

• CSR spending remains concentrated in three broad sectors: education, healthcare, and rural poverty alleviation. (Accounting for over 60 per cent of total CSR funds)

• Critical sectors like environmental sustainability and livelihood enhancement receive inadequate attention.

• Many CSR initiatives lack impact assessments, duplicate government schemes, and show weak community participation, limited innovation, and poor strategic planning.

• Often, projects are implemented in a top-down manner, driven more by corporate discretion than actual deprivation or community needs.

Key Recommendations:

• Companies should move away from treating CSR as merely a legal requirement and instead focus on an impact-driven approach.

• The Ministry of Corporate Affairs must create clear policies to help companies direct CSR funds to the regions and sectors that need them most.

• State governments must use tools like the Rural Quality of Life (RQOL) Index to guide CSR spending toward underserved areas.