Challenges Faced by Punjab in Attracting CSR

Punjab, a state that has seen its corporate social responsibility (CSR) funds treble over the last five years, remains significantly behind other major states in reaping the benefits of corporate charity. Despite this growth, the state’s share of CSR funds is still dwarfed by that of leading states such as Maharashtra, Gujarat, and Karnataka.

Punjab’s CSR Growth: An Overview

A Surge in CSR Funds

Over the five-year period from 2018-19 to 2022-23, Punjab received a total of ₹947.21 crore in CSR funds. This amount represents just 0.74% of the ₹1.28 lakh crore spent by public and private sector companies on CSR activities during the same period. Major states like Maharashtra, Gujarat, Karnataka, Tamil Nadu, and others have been the primary beneficiaries of these corporate funds, with Punjab trailing far behind.

Comparative CSR Spending Across States

Punjab vs. Other Major States

While Punjab’s annual CSR expenditure increased from ₹88.51 crore in 2017-18 to ₹247.57 crore in 2022-23, this is still far less than the amounts received by other states. For instance, Maharashtra received ₹5,497 crore, Gujarat ₹2,008.42 crore, and Karnataka ₹1,985.82 crore in FY23 alone. Even neighboring states like Rajasthan and Haryana have been more successful in attracting CSR funds compared to Punjab.

Efforts to Boost CSR Contributions

Government Initiatives to Attract CSR Funds

The Punjab government has been making concerted efforts to attract more CSR funding to the state. The establishment of a CSR Board and a CSR Authority under the chief minister was aimed at streamlining and boosting CSR activities. DPS Kharbanda, CEO of the Punjab CSR Authority, highlighted ongoing efforts to engage with top managements of major companies, with plans for one-on-one meetings to secure more funds for various development sectors in Punjab.

Challenges Faced by Punjab in Attracting CSR

Lack of Corporate Headquarters and Commitment

One of the key challenges for Punjab in securing its fair share of CSR funds is the absence of major companies headquartered in the state. Dr. Sandeep Goyal, former CEO of the Punjab CSR Authority, pointed out that companies often prefer to spend their CSR funds in states where they are headquartered or have significant operations. Additionally, a lack of intent and commitment from the state’s bureaucracy has also been a hindrance in effectively channeling CSR funds to Punjab.

Disparity in CSR Fund Allocation Within Punjab

Concentration of Funds in a Few Districts

In 2022-23, 70% of the ₹247.57 crore CSR funds spent in Punjab were concentrated in just five districts. Ludhiana and SAS Nagar, home to some of the state’s top companies, were the top beneficiaries, receiving ₹60 crore and ₹54 crore, respectively. Other districts like Bathinda, Amritsar, and Sangrur also saw significant CSR funding, while many districts, including Muktsar, Tarn Taran, Fazilka, and others, received little to no CSR support.

Here’s a table summarizing the key facts from the article:

Sector-Wise CSR Spending in Punjab

Focus Areas of CSR Activities

The CSR funds in Punjab were predominantly spent on education, differently-abled support, and the livelihood sector, which together received ₹112.63 crore. Health, hunger eradication, and safe drinking water initiatives followed with ₹79.41 crore, while environmental conservation and animal welfare received ₹30.4 crore. Notably, only ₹8 lakh was spent on slum development, highlighting a significant gap in addressing urban poverty.

ADVERTISEMENT

Legal Framework Governing CSR Spending

Understanding CSR Compliance

Under the Companies Act, 2013, companies meeting certain financial criteria are required to spend 2% of their average profits from the preceding three financial years on CSR activities. The law empowers the board of each company to determine the specific activities and areas for CSR project implementation. In Punjab, HPCL-Mittal Energy Limited emerged as the top CSR contributor in FY23, spending ₹16.51 crore, followed by HDFC Bank and Havells India Limited.

Punjab’s Path Forward in CSR

ADVERTISEMENT

While Punjab has seen growth in CSR funding over the years, it still has a long way to go in matching the levels of CSR contributions seen in other major states. The state government’s ongoing efforts to engage with corporate entities and streamline CSR initiatives are steps in the right direction, but overcoming structural challenges and ensuring equitable distribution of funds across all districts will be crucial in maximizing the impact of CSR in Punjab.

(India CSR)