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

A decade ago, India became the first country to legally mandate Corporate Social Responsibility (CSR). Section 135 of the Companies Act 2013 outlines the rules and regulations governing CSR. Its role in social development is crucial. According to the National CSR Portal, from 2014 to 2023, Rs 1.84 lakh crore of CSR funds were disbursed.

With the extent of contributions increasing, a question arises: how can CSR help Indian agriculture, especially towards making it more sustainable? Because the key question in Indian agriculture is whether agriculture can be made economically viable and ecologically sustainable.

Nearly 47% of the population depends on agriculture for employment and the fraction of India’s labour force in agriculture is significantly higher than the global average of 25%. Economically, agriculture accounts for 16.73% of India’s GDP. Many Indian families are closely associated with agriculture at various levels. So agriculture as a sector has a pivotal role in shaping the country’s socio-economic landscape.

In the Green Revolution, urgent attention was given to enhancements in agricultural productivity. Now that India’s food production is on a relatively stable footing, concerns have focused on the degradation of the natural resource base, stagnant farmer incomes, and threats caused by climate change.

Lately, there have been clear signs from corporate entities that they wish to contribute to climate action and sustainability in the agricultural sector in India through their CSR budgets. According to an outlook report prepared by a CSR platform last year, 23% of companies surveyed had “environment and sustainability” as their CSR priority area. “Environment and sustainability” was the second priority area for more than a third of companies and the third for more than a quarter of the companies (the first was healthcare plus water, sanitation, and hygiene).

Recent policies like Parampragat Krishi Vikas Yojana (PKVY) and the Mission for Integrated Development of Horticulture (MIDH) have responded to these concerns and the 2024-2025 agriculture and allied sector budget — currently Rs 1.52 lakh crore — explicitly mentions “productivity and resilience in agriculture” as the key motive behind the allocations. But Indian agriculture needs more support as government funds often fall short.

Capital requirements and infrastructural development are the most important needs of Indian agriculture today — and this is also where CSR activities have previously contributed and are expected to continue doing so. Some examples of such activities are establishing grain banks, farmer schools, livelihood projects based on agriculture and allied activities, water conservation projects, and energy-efficient irrigation. The recent paradigm shift in agriculture towards sustainability and modern agriculture makes a good case for CSR funds from the private sector.

However, there is an important problem that hinders CSR’s potential in agriculture: there is currently no way to fully determine the extent of funding going into these projects consistently and distinctively, and to categorise them based on targeted sectors of CSR activities. In other words, current reporting mechanisms have little to no emphasis on agriculture-related CSR initiatives.

This isn’t the case with CSR sectors like healthcare and education, which are the funds’ largest recipients and make up half of the total CSR contributions until 2023. Importantly, their allocations can be tracked effectively because their activities are clearly demarcated and well-defined.

Under activities mentioned in Schedule VII of the Companies Act, activities targeting agricultural sustainability could fall under 11 of the 29 development sectors of CSR allocations specified in documents on the National CSR Portal. These are (quoting verbatim) gender equality; agroforestry; poverty, eradicating hunger and malnutrition; technology incubators; animal welfare; environmental sustainability; livelihood enhancement projects; conservation of natural resources; rural development projects; socio-economic inequalities; and women’s empowerment. These 11 sectors disbursed Rs 53,046.75 crore from 2014-2015 to 2022-2023. An additional Rs 8,731.62 crore was received by other Central government funds and sectors.

But there’s little chance of tracking the funds spent for agriculture-related initiatives alone because these 11 sectors encompass a great variety of activities, many of which are unrelated to agricultural sustainability, thus affecting reporting and limiting sectoral impact assessments.

The listed activities currently emphasise companies understanding if they are eligible rather than explicitly delineating the sector to which their CSR funds can be flowed. To encourage sustainable activities in land-based sectors in India, including agriculture, forestry, and fishing, this is of particular concern because these sectors are related to various aspects of human wellbeing and to policy priorities in India, including rural development and climate action.

Given this issue as well as the importance of agriculture for the Indian economy and its place in the country’s plans and strategies to engender more sustainable growth and effect a just transition, specifying agriculture as a distinct sector in CSR activities is crucial.

Transitioning the reporting framework based on sectors receiving funds would also help streamline and better target the available funds, will add more meaning to the contributions, and will ensure transparency. Likewise, identifying the prevailing sustainability issues vis-à-vis agroecosystems and directing funds according to requirements will help drive tractable changes.

These requirements may be in terms of hard (e.g. capital expenditure) and soft (e.g. capacity building towards good agricultural practices) infrastructure development. Ultimately, our production systems would benefit from the increased attention, transparency and accountability that a reformed reporting framework may bring.

Dasari Giridhar is a research associate and Manan Bhan is a Fellow in Residence — both at the Ashoka Trust for Research in Ecology and the Environment (ATREE), Bengaluru.