Legitimising CSR through the institutional backup – gauging compliance of the Indian corporate sector in the mandatory regime

What is it about?

The institutional backup in India has made CSR contribution mandatory for the corporate sector. In the light of this revolutionary amendment the current paper assesses the contribution of companies towards social activities and checks the compliance status of companies against the mandatory yardstick of 2% of average net profits of previous three years. The study is conducted on a rich sample of 346 companies and covers a substantial time period of 7 years from 2014 till 2021. It calculates the preliminary statistics and gauges the role of institutional theory in legitimising CSR in India. The results show consistent deficit in CSR spends over years with a high level of non-compliance to the statute. Even the most profitable companies fail to obey the regulation and defy the law. The worrisome results assert that a stringent action is needed to check the disobedience of law otherwise the purpose of institutionalisation of CSR shall be marred and defeated. The study gives a lucid picture of the abidance with the basic rules of Section 135 of the Companies Act 2013 and hence contributing significantly to the prolific literature sets the ball rolling for future research.

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