CSR & Indian Agriculture

India’s Corporate Social Responsibility (CSR) framework has evolved significantly since its legal introduction under Section 135 of the Companies Act 2013, making it the first country to mandate CSR spending. With Rs 1.84 lakh crore of CSR funds disbursed between 2014 and 2023, the contributions from the corporate sector have shown a marked increase, particularly in the areas of healthcare, sanitation, education, and environmental sustainability. However, one sector that could greatly benefit from this funding is agriculture, especially as the country strives to make its farming practices more economically viable and ecologically sustainable.

Importance of Agriculture to India’s Economy

• Agriculture plays a pivotal role in India’s socio-economic fabric. Nearly 47% of the population is dependent on agriculture for employment, and the sector contributes about 73% to India’s GDP.
• The vast majority of Indian families are directly or indirectly associated with agriculture, and the sector shapes the livelihoods of millions.
• Despite its importance, agriculture in India faces significant challenges, including climate change, stagnant farmer incomes, and degradation of natural resources.
• Agriculture’s Transition to Sustainability
• Following the Green Revolution, which prioritized increasing agricultural productivity, India has now reached a stage where food production is relatively stable. The focus has shifted toward sustainability—ensuring that agriculture is not only productive but also resilient to climate shocks and environmentally sustainable. Recent initiatives such as the Parampragat Krishi Vikas Yojana (PKVY) and the Mission for Integrated Development of Horticulture (MIDH) have sought to address these concerns.
• The 2024-2025 agriculture budget of Rs 1.52 lakh crore explicitly mentions the productivity and resilience of agriculture as key priorities.
• However, despite these efforts, government funding often falls short of meeting the sector's vast needs, particularly in terms of infrastructure development and capital investments.

CSR’s Role in Supporting Agricultural Sustainability

• Given these challenges, the private sector’s involvement through CSR has become increasingly important. As of the most recent reports, 23% of companies surveyed identified "environment and sustainability" as their CSR priority, signaling a willingness to contribute to sustainable agricultural development. CSR funding has already been channeled into various projects, such as:
  • Establishing grain banks to prevent food waste and ensure food security.
  • Farmer schools for improving agricultural knowledge and skills.
  • Water conservation projects to mitigate water scarcity in agricultural areas.
  • Energy-efficient irrigation systems to promote sustainable farming.

Challenges in Tracking CSR Funds for Agriculture

• Despite the growing interest in sustainable agricultural practices, one of the key challenges is tracking CSR contributions specifically related to agriculture. Currently, there is no comprehensive way to distinctly categorize and monitor CSR spending on agricultural sustainability initiatives. While sectors like healthcare and education have clear guidelines for tracking funds, the agricultural-related activities under CSR are scattered across multiple categories, such as:
  • Agroforestry
  • Poverty alleviation and hunger
  • Technology incubators
  • Environmental sustainability
  • Livelihood enhancement projects
  • Rural development
• These broad categories, while encompassing some agriculture-related initiatives, also cover a wide range of activities that may not directly pertain to agricultural sustainability, making it difficult to determine how much is actually being spent on farming-related projects.
• From 2014 to 2023, sectors related to agriculture disbursed Rs 53,046.75 crore under CSR. However, because these funds are spread across a variety of sectors, the precise allocation for agriculture remains unclear. This lack of clarity makes it difficult to assess the impact of CSR investments on India’s agricultural landscape, which is critical given the sector’s importance.

Significance

• Increased Transparency: Clear reporting mechanisms would allow for better tracking of CSR funds allocated to agricultural initiatives. This would help ensure that the funds are being spent effectively and efficiently, with greater accountability to both stakeholders and the public.
• Targeted Funding: With a distinct focus on agriculture, CSR funds could be targeted to address specific sustainability issues such as soil health, water conservation, climate resilience, and modernization of farming practices. This would make the funds more impactful and aligned with India’s larger agricultural policies.
• Alignment with Policy Priorities: Specifying agriculture as a CSR sector would also align with India’s rural development goals, climate action plans, and poverty alleviation initiatives, making it easier for companies to contribute to these national priorities.
• Boosting Capacity Building: In addition to capital expenditure for infrastructure, CSR initiatives could also focus on capacity building, improving the skills and knowledge of farmers, and promoting sustainable agricultural practices.
• Tracking Impact: A clear focus on agriculture would allow for better impact assessments of CSR projects in the sector. These assessments could inform future policies and ensure that investments lead to tangible improvements in agricultural productivity and sustainability.