Abstract
Developing countries are struggling to meet UN SDGs due to limited resources. Corporations, with their large technological, financial, and managerial resources, have the means to contribute to the social development agenda of a country. India conducted a unique experiment by making it mandatory for large firms to spend 2% of their net profits on corporate social responsibility expenditures by enacting CSR Act in 2013. The CSR law intends to channelize corporate funds towards social welfare activities and environmental protection. It has been nearly 10 years since the implementation of the Act. Over INR 800 billion has been spent on various development projects under CSR initiatives. Understanding how these funds are allocated among different activities and who is benefitting from the implementation of CSR projects would give insights to policy makers to utilize these funds in a most efficient manner.
This research provides the first comprehensive and rigorous analysis of the distribution of CSR expenditure across India, determinants of location of CSR projects, geographic inequities in CSR expenditure, and the contribution of CSR funds to health outcomes. We find that CSR expenditures in India steadily increased after the implementation of the Act,however, there are strikingly wide disparities in CSR expenditures across different geographical regions of India. We also find that firms tend to locate their CSR projects in the vicinity of their facilities and regions of their operation. We also find robust evidence of CSR expenditures reducing infant mortality rates in India. Our results suggest that the unique experiment conducted by India has been successful in complementing government efforts towards improving health outcomes. This law has the potential to further contribute to the socio-economic agenda of the government.