Corporate Social Responsibility (CSR) carries a promise it has yet to fully fulfil. Its distribution resembles a pattern familiar from economics and sociology: the Matthew effect, where existing advantages reinforce themselves rather than diffuse. Regions that already possess greater industrial and institutional capacity may be better positioned to attract resources intended to address developmental disparities.
CSR spending appears to follow a similar pattern. An empirical study by researchers at IIT Delhi and the High-Level Committee on CSR constituted in 2018 both identified a concentration of CSR funds across a relatively small group of states and districts. Yet, eight years after the Committee's recommendations, and following subsequent regulatory changes, this concentration persists. The implications are particularly significant for India's 112 Aspirational districts, which received only 6.8 percent of total CSR share in FY24-25, despite being identified as development priorities.
This persistence points to two plausible forces: firms tend to spend near their operations, and few local agencies exist to receive funds elsewhere. Current data cannot separate them, so policy should begin with steps that can.
CSR Follows Multiple Variables
Before the 2021 CSR amendment rules, an empirical study by Pareek et al. (2020) at IIT Delhi examined the factors associated with the geographical distribution of CSR funds using CSR data from 2014-2017. The researchers used statistical regression models to examine which districts or parliamentary constituencies were associated with higher CSR funding.
Across all three models, the Aggregate Development Index (ADI)—which measures socioeconomic changes of a region through satellite imagery—and industrialisation (number of factories) coefficients remain positive and significant. The model's explanatory power roughly doubles when industrial variables are added, while political variables add comparatively little, as reflected in R². Thus, this study indicates that more developed and industrial constituencies were associated with higher CSR funding.
This suggests that CSR concentration reflects structural advantage of place, not where the developmental gaps are. Consistent with this pattern, Maharashtra, Karnataka, Gujarat, Tamil Nadu, Andhra Pradesh, Telangana, and Delhi accounted for an average of 39.21% of CSR expenditure during FY2014-15 to FY2016-17.
Contemporary Data Traces a Sharper Silhouette
A decade later, contemporary CSR data reveals much sharper concentration. CSR state expenditure MIS FY2024-2025 shows that the same cohort of industrial and economically developed states and Union territories—Maharashtra, Karnataka, Gujarat, Tamil Nadu, Andhra Pradesh, Telangana, and Delhi—receive 61 percent of the total CSR expenditure of ₹40,794 crore.
CSR district expenditure MIS FY2024-2025 shows sharper concentration at the district level. Ranking all 727 districts by their share of total expenditure, the top five (Mumbai, Pune, Ahmedabad, Chennai, and Delhi) account for about 25 percent of total CSR expenditure. Meanwhile, the bottom 300 districts constitute less than 2 percent of total CSR expenditure. Similarly, 112 Aspirational districts, designated by NITI Aayog as among the country's least developed, form only 6.8 percent of the total CSR expenditure.
CSR Concentration Persists Even After Regulatory Clearance
The 2021 clarification by the Ministry of Corporate Affairs (MCA) made the local-area preference under Section 135(5) directory rather than mandatory, yet concentration persists and has deepened. The preference alone cannot explain this. The evidence points to two forces that act at different stages: whether funds have a channel to reach a place, and whether firms choose to send them there.
Since the 2021 CSR amendment rules, CSR routed through external partners must pass through implementing agencies holding CSR-1 registration. The MCA's IA master data lists 116,598 registered agencies. The seven states and UTs analysed above hold 58 percent of them and receive 61 percent of CSR. Maharashtra itself holds 20.9 percent of agencies and 21.2 percent of CSR.
At the district level, the bottom 300 districts hold approximately 6 percent of agencies, and about 106 districts out of 727 have none listed under their name. This is consistent with funds having fewer routes to travel where few agencies exist, though agencies may also register where money already flows.
Yet agencies explain only part of the pattern. Uttar Pradesh, West Bengal, and Bihar hold 9.8, 6.3, and 2.6 percent of agencies but receive only 5.4, 2.6, and 1.1 percent of CSR. Where agencies exist but money does not follow, something upstream of the channel may be deciding.
The decision upstream is where firms choose to spend. Gatignon and Bode, analysing 87,000 projects by over 12,000 firms in the mandate's first four years, found that most firms implemented projects close to their head offices, the exceptions being industry leaders and state-owned enterprises. Over half the projects were in four states, with Maharashtra alone at 25 percent. Firms' FY2024-25 CSR policy reports suggest the pattern continues despite the 2021 preference clarification: Tata Power, BHEL, and Amber tie CSR to needs near their operations, and BHEL earmarks at least 75 percent for local areas. These firms are illustrative, not exhaustive, as other firms like NTPC, JSW Steel, ITC Limited, and many others follow a similar approach.
Together, proximity shapes where firms want to spend; agency networks shape whether the channel exists. Where both align, as in Maharashtra and other states, funds are abundant. Where firms are absent and agencies thin, funding is least likely to arrive. This is consistent with the Matthew effect, though the data cannot weigh the two forces. What they do show is that removing the legal preference has not removed the structure that sustains concentration.
Rebalancing the Map
The clarification that local-area preference under Section 135(5) is directory rather than mandatory has not, by itself, altered CSR concentration. Therefore, policy should focus not on overriding local needs, but on three gaps: places with no channel, the lack of visibility into where firms spend, and no benchmark for Aspirational districts.
First, the Ministry of Corporate Affairs should pilot agency support in the 106 districts with no registered implementing agency. Local organisations would receive technical help to obtain CSR-1 registration and list proposals on the National CSR eXchange Portal. Success would be measured by registrations and CSR inflows over two to three years. If inflows rise, capacity was a binding constraint. If not, the problem lies with firms' choices, and the response should shift.
Second, the Ministry should compile data in a dynamic CSR dataset that could show each company's share of spending in its registered state, other states, and Aspirational districts. Disclosure is cheap, preserves discretion, and would show whether the preference Gatignon and Bode describe persists.
Third, the Ministry should set a benchmark for CSR spending in Aspirational districts, which currently receive 6.8% of the total, to be raised as implementing agencies and project proposals in these regions develop. Without such a target, the developmental gap these districts face will remain unaddressed by corporate philanthropy that follows the corporate trail rather than the development one.
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Dr. Palash Bhattad is a Dental graduate (BDS) and an independent researcher with a keen interest in public policy analysis, governance, and behavioural science developed through extensive UPSC civil services preparation. He seeks to contribute to critical policy issues central to India's development
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