CSR Spending In Small Cities: Corporate Social Responsibility (CSR) spending in the country, including Maharashtra, has long followed a fixed pattern, with most funds concentrated in big cities like Mumbai and their surrounding areas. In contrast, smaller cities and industrial districts received relatively less CSR funding despite substantial economic activity. However, according to Satva Consulting’s report ‘CSR’s Next Act’, this trend is now gradually changing. The flow of CSR funds has now started moving towards small towns, industrial areas and needy areas, even though the influence of big cities has still not completely ended.
What is CSR fund?
The provision of CSR in India was implemented under the Companies Act, 2013, according to which it is mandatory for eligible companies to spend at least 2 percent of their average net profit on social causes. With time it has become a major financial source. Currently, more than 4,000 companies together spend around Rs 30,000 crore every year on CSR, which plays an important role in the development of the country.
Recorded an increase of 55 percent
There has been a 55 percent increase in CSR spending in small towns in the last three years. The increase in funding in cities like Madurai, Varanasi, Mysore and Vadodara indicates that the scope of CSR is now expanding. Similarly, good growth has also been seen in industrial districts. Between fiscal years 2022 to 2024, CSR funds in these sectors grew by 120 percent, while overall CSR spending increased by 30 percent. The share of these districts has increased from 4.4 percent to 7.4 percent.
The nature of CSR is becoming local
This increase has been especially seen in some districts of the country. Jharsuguda in Odisha received CSR funds worth around Rs 549 crore, while Raigarh, Jamnagar and Ballari received funds ranging between Rs 295 to Rs 402 crore. This growth is mainly due to companies in the metals, mining and energy sectors, which prefer to invest around their operating areas.
CSR projects are also becoming more local in nature. During the financial year 2022-24, about 85 percent of the projects were limited to a single district and two-thirds of the total expenditure was on these. Despite this, there is still an imbalance between CSR delivery and actual development needs. About 75 percent of CSR spending is concentrated in fewer than 200 districts, many of which are relatively poor, while more needy areas still receive limited funding.
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Increasing investment in aspirational districts
Government identified ‘aspirational districts’ Improvement has also been seen. While their share was 1.3 percent in the financial year 2015, it has increased to 4.5 percent in 2024. Public sector companies have spent about 11 percent of their CSR in these districts, which is higher than private companies. Large companies with CSR budgets of more than Rs 10 crore are also increasing their participation in these sectors, with about 5 per cent of their funds going to aspirational districts.
Investment around the headquarters
From the sector point of view, BFSI, energy and mining companies have contributed the most. At the same time, the size of the company also affects the CSR strategy. Small companies always invest in their state or around their headquarters, while big companies spread their projects across multiple states and districts. There has also been a change in the methods of implementation of CSR. While earlier the role of NGOs was prominent, now universities, hospitals, incubators and corporate foundations are also getting more funds. Nearly 20 percent of CSR spending in fiscal year 2024 was channeled through such institutions. Now the nature of CSR is changing. Instead of being limited to big cities, it is spreading to small towns and industrial areas.
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