Are CSR Contributions to Agriculture Properly Tracked?

What’s in today’s article?

• Origin of CSR
• Meaning of CSR
• CSR in India
• Companies Covered under the Act
• Performance So Far
• News Summary

Origin of CSR

• Howard Bowen, an American economist, is widely regarded as the father of modern CSR.
• In his book “Social Responsibilities of the Businessman” in 1953, he writes, “CSR refers to the obligations of businessmen to pursue those policies which are desirable in terms of the objectives and values of our society”.
• This has become the backbone by which modern CSR principles are based.

Meaning of CSR

• The concept of CSR rests on the ideology of businesses giving back to society as they grow and benefit.
• Companies take resources in the form of raw materials, human resources etc from the society.
• By performing the task of CSR activities, the companies are giving something back to the society.
• Examples of common CSR objectives include minimizing environmental externalities, promoting volunteerism among company employees, and donating to charity.

CSR in India

• CSR in India has traditionally been seen as a philanthropic activity.
• However, with the introduction of Section 135 in the Companies Act 2013, India became the first country to have statutorily mandated CSR for specified companies.
• The mandatory CSR provisions were made effective from 1st April, 2014 for companies with a certain profit, turn-over or valuation.
• Concerned Ministry: Ministry of Commerce and Industry

Companies Covered under the Act

• The companies which fall in the ambit of any of the following three criteria are required to spend on CSR.
  • Company with a net worth of Rs. 500 crore or more, or
  • Turnover of Rs. 1,000 crore or more, or
  • Net profit of Rs. 5 crore or more during the immediately preceding financial year.
• Such companies are required to do CSR spend amounting to 2 % of their average annual profit over last three years.
• The Act also enumerates the activities that can be undertaken and the manner in which the companies can undertake CSR projects/programmes.

Performance So Far

• CSR Expenditure Trends:
  • Cumulative Spending: From 2014 to 2023, companies in India have collectively spent approximately ‚₹1.84 lakh crore on CSR activities.
  • Annual Spending: In the fiscal year 2022-23, the prescribed CSR budget for 301 large companies was ‚₹13,426 crore, with an actual expenditure of ‚₹12,890 crore, indicating a compliance rate of over 96%.
• Sectoral Allocation:
  • Healthcare and WASH (Water, Sanitation, and Hygiene): 26% of companies identified this as their primary CSR focus.
  • Environment and Sustainability: 23% of companies prioritized this area, reflecting a growing commitment to environmental issues.
  • Promotion of Education: 23% of companies dedicated resources to educational initiatives.

News Summary

• In India, agriculture plays a crucial role in the economy, providing employment to nearly 47% of the population and contributing around 16.73% to the GDP.
• Recognizing this, India legally mandated Corporate Social Responsibility (CSR) in 2013 under Section 135 of the Companies Act, requiring certain corporations to allocate part of their profits towards social causes.
• Since then, CSR contributions have increased significantly, with ₹1.84 lakh crore disbursed from 2014 to 2023.
• This raises questions about CSR’s role in agriculture, especially regarding the impact of contributions on agricultural sustainability.
• CSR’s Role in Agriculture:
  • With a high percentage of India's workforce employed in agriculture, CSR initiatives have the potential to address key issues in the sector:
  • Environmental Degradation: As natural resources become strained, the need for sustainable agricultural practices grows.
  • Stagnant Farmer Incomes: With limited growth in earnings, initiatives can help improve productivity and livelihood.
  • Climate Change Threats: Shifts in climate patterns challenge crop yields and agricultural stability, requiring adaptive practices.
  • A CSR outlook report highlighted that 23% of surveyed companies prioritize "environment and sustainability," indicating an interest in supporting agricultural and environmental projects. C
  • SR funds have been allocated to activities like grain banks, farmer schools, agricultural livelihood projects, water conservation, and energy-efficient irrigation.
  • The recent focus on sustainability in agriculture aligns with CSR goals and encourages private sector engagement.
• Importance of Sector-Specific Reporting:
  • Designating agriculture as a standalone CSR category could improve the clarity and effectiveness of contributions. This would enable:
    • Targeted Funding: Funds could be directed toward specific needs in agriculture, such as sustainable farming methods or climate resilience measures.
    • Transparency and Accountability: More precise reporting on CSR contributions would ensure companies are held accountable for their impact on agricultural sustainability.
    • Enhanced Impact Measurement: Identifying the unique needs within agricultural ecosystems allows for targeted interventions, which could result in more measurable and meaningful changes in the sector.

Q1.What is Nitrogen Fixation?

Nitrogen fixation is the process of converting nitrogen gas in the atmosphere into ammonia or other nitrogen compounds that are useful for plants and other microbes

Q2. What is Soil Health Card Scheme?

Soil Health Card Scheme is a scheme launched by the Government of India on 19 February 2015. Under the scheme, the government plans to issue soil cards to farmers which will carry crop-wise recommendations of nutrients and fertilisers required for the individual farms to help farmers to improve productivity through judicious use of inputs.

News: Tracking lacuna limits CSR’s contributions to agri sustainability | Analysis