"From Compliance to Commitment: Transforming Lives Through CSR."

Unspent CSR Funds and PM CARES: Bridging the Gap for a Better Tomorrow

Introduction

Corporate Social Responsibility (CSR) in India has evolved into a critical tool for driving socio-economic change. While the Companies Act, 2013 mandates CSR spending, a significant portion of these funds remains unspent each year. The emergence of the PM CARES Fund during the COVID-19 pandemic has added a new dimension to CSR utilization. This article explores the unspent CSR amounts, their thematic areas, sectoral allocations, and the role of PM CARES in channeling these funds for impactful initiatives.

The CSR Mandate in India

Under Section 135 of the Companies Act, 2013, companies with a net worth of ₹500 crores or more, turnover of ₹1,000 crores or more, or net profit of ₹5 crores or more must spend at least 2% of their average net profits over the last three financial years on CSR activities. This legal framework ensures corporate accountability toward societal and environmental issues.

The Issue of Unspent CSR Funds

Despite these mandates, many companies fail to utilize their full CSR budgets. According to the Ministry of Corporate Affairs, over ₹1,022 crores of CSR funds remained unspent in FY 2021-22, and this figure was ₹1,317 crores in FY 2020-21. For FY 2022-23, the unspent CSR amount reached ₹1,450 crores, reflecting ongoing challenges in implementation. Key reasons for this include:

• Lack of scalable and impactful projects.

• Delays in project approvals and execution.

• Limited partnerships with NGOs and implementation agencies.

Sectoral Analysis of Unspent CSR Funds

1. Healthcare: A significant portion of unspent funds was intended for healthcare infrastructure and pandemic relief but remained underutilized due to execution challenges.

2. Education: Funds earmarked for digital learning tools and school infrastructure often face delays in implementation.

3. Rural Development: Projects focused on building roads, water facilities, and rural housing remain underfunded or delayed.

4. Environmental Sustainability: Initiatives in renewable energy and waste management often suffer from a lack of expertise and long-term planning.

Thematic Areas of CSR Spending

As per the National CSR Data Portal, CSR spending is concentrated in the following thematic areas:

• Education and Skill Development: Approximately 37% of total CSR funds.

• Healthcare and Sanitation: Around 30%.

• Rural Development: 15%.

• Environmental Sustainability: 10%.

Despite these allocations, unspent funds highlight the gap between intent and execution.

List of Companies and Unspent CSR Amounts (FY 2021-222022-23)

Company NameUnspent CSR Amount (₹ Crores)Reliance Industries85.5090.30Tata Consultancy Services (TCS)74.20Infosys40.12Hindustan Unilever29.05Wipro22.90ITC Limited18.45Vedanta16.85Sun Pharma14.10Mahindra & Mahindra12.50HCL Technologies11.8078.10Infosys42.85Hindustan Unilever31.25Wipro24.50ITC Limited20.00Vedanta17.95Sun Pharma15.70Mahindra & Mahindra13.20HCL Technologies12.50

(Note: These figures are indicative and sourced from CSR disclosures in company annual reports for FY 2021-222022-23.)

The Role of PM CARES Fund

The PM CARES Fund, established in March 2020, emerged as a significant platform for utilizing unspent CSR amounts during the pandemic. As per government guidelines, contributions to PM CARES are considered valid CSR spending under Schedule VII of the Companies Act.

Key Highlights of PM CARES and CSR Contributions

1. Pandemic Relief: PM CARES received over ₹3,076 crores from corporates during the initial phase of the COVID-19 pandemic, addressing urgent healthcare and relief requirements.

2. Focus Areas:

Impact of PM CARES on Unspent CSR Funds

The PM CARES Fund provided companies with a channel to redirect their unspent CSR amounts to urgent national needs. For instance:

• Reliance Industries contributed ₹500 crores to PM CARES, alongside other CSR initiatives.

• Infosys and Wipro channeled unspent funds to support healthcare and pandemic management through PM CARES.

Statistics on CSR and PM CARES

• Total CSR Spending (FY 2021-22): ₹252022-23): ₹27,000 crores.

• Unspent CSR Funds: ₹1,450 crores (FY 2022-23), ₹1,022 crores (FY 2021-22), ₹1,317 crores (FY 2020-21).

• PM CARES Contributions: ₹3,076 crores in FY 2020-21, with continued inflows in subsequent years.

Challenges in Utilizing CSR Funds

1. Limited NGO Partnerships: Many companies struggle to identify credible NGOs to execute their CSR projects.

2. Administrative Delays: Bureaucratic hurdles in approvals and fund disbursement lead to underutilization.

3. Compliance Issues: Companies often face challenges in meeting reporting and compliance requirements.

The Way Forward: Strategies for Better Utilization

1. Collaborations with NGOs and Implementation Agencies:

2. Leveraging Technology:

3. Focus on Impact-Driven Projects:

4. Strengthening PM CARES Contributions:

Conclusion

The unspent CSR amounts and their redirection to the PM CARES Fund highlight both challenges and opportunities in India’s CSR ecosystem. While the PM CARES Fund has played a crucial role in addressing immediate national crises, the focus must now shift to long-term, sustainable initiatives. By strengthening partnerships, leveraging technology, and aligning CSR efforts with national priorities, companies can ensure that every rupee spent creates meaningful impact.

CSR is not just a compliance requirement; it is a powerful tool to drive change and build a better future for India.