Corporate Social Responsibility In India: A Constitutional And Legal Examination
- IJLLR Journal
- Mar 2
- 2 min read
Yedhu Krishnan S, LLM (Constitutional and Administrative Law), Christ (Deemed to be University) Bangalore
ABSTRACT
Corporate Social Responsibility (CSR) in India differs from other countries because it is among the few nations where CSR expenditure is legally required under the Companies Act 2013. This study analyzes whether such requirements comply with the Indian Constitution, especially Article 19(1)(g) (Right to Trade & Business), Article 14 (Right to Equality), and Article 265 (No Tax Without Authority of Law). The article examines compulsory CSR and its possible categorization as an indirect tax. It also compares international frameworks for CSR across the US, UK, and EU in both voluntary and mandatory forms. Based on a constitutional and legal perspective, this research articulates current jurisprudential lacunae and suggests reforms to balance corporate freedom with social responsibility. The results seek to contribute to the debate on corporate governance in India, emphasizing the requirement for a balanced approach honouring constitutional rights while promoting sustainable business. The study emphasizes the need to combine legal principles with actions of social responsibility. It promotes the establishment of a framework that obliges businesses to pursue socially valuable practices without violating their freedom of operation. India’s Companies Act of 2013 serves as the principal legal structure for CSR. This legislation requires certain companies to designate 2% of their average net profits from the previous three fiscal years for CSR initiatives. The law specifically targets companies based on defined parameters like turnover, net worth, and profit thresholds, urging them to contribute positively to society through programs related to education, healthcare, environmental sustainability, poverty reduction, and rural development. The formation of CSR committees, mandated disclosures in annual reports, and the obligation to report any unutilized CSR funds to a national pool highlight the legal responsibilities placed on businesses. This paper goes on to examine the constitutional aspects of CSR, focusing on the tension between corporate independence and the government’s role in fostering social justice through mandatory corporate donations. It investigates how the Directive Principles of State Policy (DPSPs) influence the government’s CSR strategies, indirectly encouraging businesses to be responsible towards societal and environmental concerns. Additionally, the paper evaluates judicial interpretations of CSR laws, discussing obstacles to the enforceability of CSR, the judicial acknowledgment of CSR as a means to tackle social and economic inequalities, and issues relating to corporate governance. It also points out the potential clash between governmental regulation of corporate finances and business freedoms as stipulated in the Indian Constitution.
