Uncovering the geographical skew in CSR spending in India and opportunities for impactful allocations

The enforcement of the Companies Act in 2013 resulted in India becoming the first country to mandate a law for corporate social responsibility (CSR). In line with it, select Indian companies are mandated to spend two per cent of their net profits annually on CSR activities. The overall objective is to contribute toward improving India's various socio-economic indicators. Despite its noble intentions, the implementation of CSR in India has notable areas for improvement. At a national level, there is a significant issue of misallocated distribution of CSR funds, mainly in terms of geographical focus. Our analysis of CSR spending data for the last seven years reveals that a large proportion of CSR funds are spent in states already performing well on various socio-economic indicators. In contrast, underdeveloped and economically disadvantaged states receive minimal CSR expenditures. We suggest various policy interventions to address India's geographical imbalance of CSR spending.