Why in the News?
Ten years ago, India became the first country to legally mandate Corporate Social Responsibility (CSR). The section 135 of the Companies Act 2013 establishes the rules governing CSR.
- According to the National CSR Portal, ₹1.84 lakh crore in CSR funds was disbursed between 2014 and 2023.
About CSR:
Corporate Social Responsibility (CSR) is a business practice where companies contribute to social, economic, and environmental betterment, addressing societal needs alongside their profit-making objectives.
- In India, the minimum percentage of a company’s net profit that must be spent on corporate social responsibility (CSR) is 2%.
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Sectoral division of CSR:
- Education: Receives the highest CSR share (33%-40%) for building schools, scholarships, infrastructure, and vocational training.
- Health Care: Allocates 20%-30% of CSR funds to hospitals, health camps, sanitation, and disease prevention.
- Environmental Sustainability: Accounts for 5%-10% of CSR funds, with projects in biodiversity conservation, waste management, and renewable energy.
CSR’s Role in Agriculture
- Claims 10%-15% of CSR funds, targeting infrastructure, agricultural practices, and livelihood support.
- Since the enactment of the Companies Act in 2013, which mandates CSR spending, a total of Rs 1.84 lakh crore has been disbursed in CSR funds from 2014 to 2023.
- These funds have increasingly targeted sustainability initiatives within agriculture, with 23% of surveyed companies prioritizing “environment and sustainability” in their CSR activities.
- Over 90.8% of farmers involved in CSR programs reported improvements in income or risk reduction due to these initiatives.
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How much of an impact does Agriculture have on India’s GDP?
- Agriculture contributes approximately 15% to 18.2% of India’s GDP, reflecting a decline from 35% in 1990-91 due to rapid growth in the industrial and service sectors. The average annual growth rate of the agricultural sector has been around 4% over the last five years. (acc to pib data)
- Agriculture remains crucial for employment, providing livelihoods for about 42% of the population, which is significantly higher than the global average of 25%.
What are the key requirements to improve agricultural sustainability?
- Investment in Infrastructure: There is a pressing need for capital investment in infrastructure development, including irrigation systems, cold storage, and transportation networks to reduce post-harvest losses and improve market access.
- Technological Advancements: Adoption of modern agricultural practices and technologies is essential. This includes better seed varieties, efficient irrigation methods, and sustainable farming techniques to enhance productivity.
- Environmental Sustainability Initiatives: Projects focusing on water conservation, energy-efficient irrigation, and agroforestry are critical for maintaining ecological balance while improving agricultural output.
What hinders CSR’s potential for agriculture?
- Lack of Clear Reporting Mechanisms: One of the main obstacles is the absence of robust frameworks to track and categorize CSR funding specifically directed towards agricultural initiatives. Current reporting practices do not emphasize agriculture-related CSR activities adequately.
- Diverse Allocation Categories: CSR activities can fall under multiple categories (e.g., gender equality, and environmental sustainability), making it difficult to isolate funds specifically aimed at agricultural sustainability. This lack of specificity hampers effective monitoring and impact assessment.
- Need for Distinct Sector Identification: To maximize CSR contributions to agriculture, it is crucial to identify agriculture as a distinct sector within CSR activities. This would streamline funding processes and enhance transparency and accountability in how funds are utilized for agricultural development.
Way forward:
- Establish Agriculture as a Separate CSR Category: Need to create a distinct sector for agriculture in CSR reporting to streamline funding, improve transparency, and enable targeted monitoring of agriculture-focused initiatives.
- Implement Comprehensive Reporting Frameworks: The government should develop robust mechanisms for tracking CSR funds specifically allocated to agricultural projects, ensuring clear categorization and facilitating better impact assessments.
Mains PYQ:
Q With a consideration towards the strategy of inclusive growth, the new Companies Bill, 2013 has indirectly made CSR a mandatory obligation. Discuss the challenges expected in its implementation in right earnest. Also discuss other provisions in the Bill and their implications. (UPSC IAS/2013)
