Is India's Corporate Social Responsibility Law Just a Tool for Visible Philanthropy

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India became the first country to make corporate social responsibility (CSR) mandatory when Section 135 of the Companies Act came into force in 2014. Since then, CSR spending has grown significantly. In the fiscal year 2023-24, over 27,000 companies spent nearly ₹35,000 crore on more than 59,000 projects. The government praises this as a model for the world. Yet, beneath these impressive numbers lies a complex story about where the money actually goes—and where it does not. This post explores the India CSR Section 135 criticism, focusing on the geographic inequality of CSR funds, the dominance of vanity projects, and the challenges faced by India’s most needy regions.

Corporate auditorium funded by CSR spending

Geographic Concentration of CSR Spending

One of the most striking features of India’s CSR spending in FY 2024 is its uneven distribution across states. Nearly 60 percent of all CSR funds flow to six states: Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh, Delhi, and Gujarat. Maharashtra alone receives close to 17 percent of the total CSR budget. These states are among India’s wealthiest and most industrialized, with well-established infrastructure and corporate headquarters.

By contrast, states like Bihar and Jharkhand, which face significant development challenges, receive less than 2 percent each. The 112 Aspirational Districts identified by NITI Aayog as the highest-need zones receive under 4 percent of total CSR spending. This stark imbalance highlights the CSR geographic inequality India faces, raising questions about the law’s effectiveness in addressing regional disparities.

The root cause lies in the design of Section 135, which encourages companies to spend CSR funds near their local areas of operation. Since most corporate headquarters are in Mumbai, Bangalore, and Hyderabad, CSR projects tend to cluster in these urban centers. This approach favors regions with existing infrastructure and visibility, leaving poorer and more remote areas underfunded.

The Prevalence of Corporate Social Responsibility Vanity Projects

Another criticism of India’s CSR law is the nature of projects funded. Many CSR initiatives focus on high-visibility, short-term activities such as school painting drives, branded health camps, and naming auditoriums after companies. These projects offer clear photo opportunities and public recognition but often lack long-term impact.

This trend reflects a preference for projects that are easy to monitor and showcase rather than those that address deep-rooted social issues. Multi-year, community-led programs that require sustained engagement and have less immediate visibility receive far less funding. This pattern fuels the perception that CSR in India often serves as a tool for corporate image building rather than genuine social transformation.

The dominance of such vanity projects limits the potential of CSR to contribute meaningfully to India’s development goals. It also diverts resources away from innovative and impactful interventions that could benefit underserved communities, especially in the Aspirational Districts.

Rural school painted as part of a CSR project

Challenges in Reaching Aspirational Districts

The Aspirational Districts program by NITI Aayog targets the most underdeveloped regions in India, focusing on improving health, education, infrastructure, and livelihoods. Despite their critical needs, these districts receive a disproportionately small share of CSR funds.

Several factors contribute to this gap:

• Local area spending requirement: Companies must spend CSR funds near their operations, which are rarely located in Aspirational Districts.

• Lack of infrastructure: Poor connectivity and limited facilities make project implementation difficult.

• Visibility concerns: Projects in remote areas offer fewer opportunities for branding and public recognition.

• Capacity constraints: Local NGOs and community groups may lack the resources to manage large CSR projects effectively.

  
  

This situation means that the CSR law, while designed to redistribute resources, ends up reinforcing existing inequalities. The wealthier states continue to attract more CSR investments, while the poorest regions struggle to access these funds.

Examples of CSR Spending Patterns in FY 2024

Data from FY 2024 illustrates these trends clearly:

• Maharashtra received nearly ₹6,000 crore in CSR funds, supporting projects mainly in urban centers like Mumbai and Pune.

• Karnataka and Tamil Nadu also attracted large shares, with many projects linked to technology, education, and health camps.

• Bihar and Jharkhand, despite having millions living below the poverty line, received less than ₹700 crore each.

• Aspirational Districts collectively received under ₹1,400 crore, a fraction of the total CSR budget.

  
  

These figures show that CSR spending often follows corporate footprints rather than social need. The law’s emphasis on local area spending means companies prioritize projects close to their headquarters or major operations.

Potential Ways to Address the Imbalance

To make India’s CSR law more effective and equitable, several changes could be considered:

• Expand the definition of local area: Allow companies to invest in regions beyond immediate operational zones, especially in Aspirational Districts.

• Incentivize long-term projects: Encourage multi-year, community-driven programs that focus on sustainable development rather than short-term visibility.

• Strengthen monitoring and evaluation: Track the impact of CSR projects beyond surface-level metrics like branding and event attendance.

• Promote partnerships: Facilitate collaboration between companies, NGOs, and government agencies to reach underserved areas.

• Increase transparency: Publish detailed reports on CSR spending by geography and project type to hold companies accountable.

  
  

These steps could help shift CSR from a tool for visible philanthropy to a genuine force for social change.

Community health camp organized under CSR initiative

Final Thoughts

India’s CSR law under Section 135 has created a large pool of resources dedicated to social causes. Yet, the current system channels most of these funds to already developed states and favors projects that offer visibility rather than transformation. The India CSR Section 135 criticism highlights how CSR geographic inequality India and the prevalence of corporate social responsibility vanity projects limit the law’s potential.