Weekly Current Affairs (8th to 14th August 2024) Part - 2 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

GS3/Sports

India at Paris Olympics 2024

Why in News?

• The Paris Olympics 2024 have concluded with India finishing 71st in the medal tally, a decline from its 48th place in Tokyo 2020. Despite winning six medals, including one silver and five bronze, the nation experienced several near misses and disheartening outcomes that have sparked discussions about the future of Indian sports.

Highlights of India's Performance at Paris Olympics 2024

Indian Medal Winners at Paris Olympics 2024

• Manu Bhaker - Bronze in Women's 10m air pistol event
• Manu Bhaker and Sarabjot Singh - Bronze in 10m air pistol mixed team event
• Swapnil Kusale - Bronze in Men's 50m rifle 3 positions
• Indian hockey team - Bronze in Men's hockey
• Neeraj Chopra - Silver in Men's Javelin Throw
• Aman Sehrawat - Bronze in Wrestling Men's 57kg freestyle event

Challenges Hindering India's Olympic Medal Tally

Talent Identification

• In India, talent identification often occurs on an ad-hoc basis, with limited reach and effectiveness.
• Systemic issues exist in scouting and identifying young athletes, particularly in remote areas.

Infrastructure and Resources

• Many regions in India lack necessary infrastructure and resources for effective athlete training.
• Limited access to training facilities, coaching expertise, and financial support hinders talent development.

Cricket's Dominance

• Cricket's overwhelming popularity in India has skewed sports capital allocation, hindering Olympic sports development.
• A more balanced approach to sports investment is crucial for a competitive sports culture.

Insufficient Sports Policies

• Historically fragmented and underfunded sports policies in India.
• Efforts like the Target Olympic Podium Scheme are recent and require time to show significant results.

Strategies for Improving India's Olympic Performance

Grassroots Development

• Emphasis on identifying and nurturing talent from a young age across various sports disciplines.

Investment in Infrastructure

• Building world-class training facilities and providing athletes with necessary support systems.

Empowering Athletes

• Athletes' involvement in decision-making can enhance accountability and transparency in sports organizations.

Collegiate Sports System

• Developing a collegiate sports system akin to the NCAA in the United States can foster future Olympic champions.

Initiatives Related to Sports Development in India

Khelo India
National Sports Development Fund (NSDF):
Sports Authority of India (SAI):

• Manages schemes promoting youth and senior sports, including the National Sports Academy Scheme and Center of Excellence Scheme.

National Sports Awards:

• Rajiv Gandhi Khel Ratna, Arjuna Awards, Dhyanchand Awards, and Dronacharya Awards celebrate sporting excellence.

Scheme for Sports & Games for People with Disabilities:

• Supports athletes with disabilities in sports participation and skill enhancement.

Rajiv Gandhi Khel Abhiyan:

• Program aiming to build sports infrastructure at the block level.

Mains Question:

Analyze India's performance at the Olympics. What strategies and reforms can be implemented to enhance India's performance in future Olympic Games?

GS3/Economy

World Biofuels Day 2024

Why in news?

Recently, World Biofuel Day was observed on 10th August 2024. It aims to raise awareness about non-fossil fuels as sustainable energy alternatives and to highlight government initiatives that support the biofuel industry. The day also commemorates the successful operation of an engine on peanut oil by German engineer Sir Rudolf Diesel on 9 August 1893.

What are Biofuels?

About: Biofuels are the fuel derived from the biomass of plants or animal wastes. It is commonly produced from corn, sugarcane, and animal waste like cow dung. These come under renewable sources of energy.

Most Common Biofuels:

• Ethanol: It is produced by fermentation of crop residues such as corn and sugarcane. After fermentation, the ethanol is mixed with petroleum, diluting it and reducing emissions. The most common blend is Ethanol-10, which contains 10% ethanol. Ethanol used in 99.9% pure alcohol, while 96% extra neutral alcohol is used in potable liquor. 94% rectified spirit is found in paints, cosmetics, pharmaceuticals, and other industrial products.
• Biodiesel: It is a renewable, biodegradable fuel made from cooking oil, recycled restaurant grease, yellow grease, or animal fats. Its production involves burning the oil or fat with alcohol in the presence of a catalyst.

Significance:

• Environmental Benefits: Biofuels are crucial for environmental sustainability as they can help alleviate some of the negative impacts of fossil fuel use, such as greenhouse gas emissions, resource depletion, and they also offer improved waste management solutions.
• Energy Security: India, the world's third-largest crude oil consumer, imports over 85% of its oil. With rising energy demand and heavy reliance on imports, biofuels can help improve energy security.
• Economic Benefits: Biofuels can cut India's oil imports and import bill, while also boosting farm incomes and addressing surplus production of crops.
• Abundant Availability: Biofuels can be produced from a variety of sources, including crops, waste, and algae.

What are the Government Initiatives and Policies on Biofuels?

• National Policy on Biofuel, 2018: It aims to reduce import dependence by promoting fuel blending with bioethanol, biodiesel, and bio-CNG. Key elements include the Ethanol Blending Programme (EBP), production of second-generation ethanol, increasing local fuel additive production under the "Make in India" program, and R&D in feedstock.
• Reduced GST on Ethanol: To encourage ethanol blending, the government lowered Goods and Services Tax (GST) rate on ethanol used for blending under the Ethanol Blended Petrol (EBP) Programme 18% to 5%.
• Pradhan Mantri JI-VAN Yojana, 2019: It aims to boost Second Generation (2G) ethanol from cellulosic and lignocellulosic sources, including petrochemical routes, by offering financial support.
• GOBAR (Galvanizing Organic Bio-Agro Resources) DHAN Scheme, 2018: It focuses on managing and converting cattle dung and solid waste in farms to useful compost, biogas, and bio-CNG, thus keeping villages clean and increasing the income of rural households.
• Repurpose Used Cooking Oil (RUCO): It was launched by the Food Safety and Standards Authority of India (FSSAI) and aims for an ecosystem that will enable the collection and conversion of used cooking oil to biodiesel.
• Global Biofuels Alliance (GBA): A multi-stakeholder alliance to facilitate international cooperation and promote the use of sustainable biofuels. It was formally launched in 2023 by India along with the leaders of the USA, Brazil, Italy, Argentina, Singapore, Bangladesh, Mauritius, and the UAE on the sidelines of the G20 Summit in New Delhi.

Challenges Related to Biofuels:

• Environmental Issues: Biofuel production can strain land and water resources, cause pollution, and alter cropping patterns.
• Food vs. Fuel Challenge: There are concerns about balancing food security and energy security, depending on the choice of feedstock and production methods for biofuels.
• Conversion Efficiency and Yield: Ethanol production involves pretreatment, hydrolysis, fermentation, and distillation, with varying efficiencies and yields depending on feedstock type, process technology, and conditions.
• Infrastructure and Distribution: Ethanol production needs robust infrastructure for transporting, storing, and delivering feedstock and fuel, which can be costly and face logistical and regulatory challenges.

Way Forward

• Production Boost: Diversify feedstock by using non-food sources and waste, support R&D for advanced biofuels, expand and modernize production facilities, and establish distilleries near fuel depots to reduce costs and enhance logistics.
• Policy and Market Mechanisms: Gradually raise the ethanol blending mandate beyond 20% by 2025, establish fixed-price contracts with oil companies to ensure market stability, and invest in R&D for optimizing blending ratios, engine compatibility, and conversion technologies.
• Technological Advancement: Invest in improved storage and transportation infrastructure, collaborate with automakers to develop ethanol-compatible engines, and enforce strict quality standards for ethanol to ensure performance and safety.
• Public Awareness and Education: Launch campaigns to educate consumers on the benefits of ethanol blending, address misconceptions, and encourage adoption. Ensure clear labeling of ethanol-blended fuels at stations to inform choices.

Mains Question:

Discuss the importance of India's Ethanol Blending Program in enhancing energy security, decreasing reliance on fossil fuels, and minimizing environmental impact.

GS3/Economy

RBI Highlights Deposit Challenges and Tightens HFC Liquidity Norms

Why in news?

• Recently, the Reserve Bank of India (RBI) Governor has urged banks to develop innovative product offerings to boost deposit growth. This comes in response to a slower deposit growth rate compared to the surge in credit demand, which poses potential risks to the banking sector's liquidity. In another development, the RBI has tightened liquidity norms for housing finance companies (HFCs) aligning them with regulations for non-banking financial companies (NBFCs), to strengthen the financial stability of these institutions.

What are the Concerns Regarding Deposit Growth?

Lending vs. Deposit Growth:

• The credit-deposit ratio has reached its highest in 20 years, with bank deposits growing at 11.1% year-on-year compared to credit growth of 17.4%.
• The growth of bank deposits has not kept pace with the surge in loan demand, creating a widening gap between credit and deposit growth.

Reliance on Short-Term Deposits:

• Banks are increasingly using short-term deposits and other liability instruments to meet credit demand, potentially leading to structural liquidity challenges.

Shift to Alternative Investments:

• Households are moving their savings from bank deposits to mutual funds, stocks, insurance, and pension funds.
• This shift, along with declining net financial assets and surging inflation, contributes to slower deposit growth.

Regulatory Requirements:

• A portion of mobilised deposits is tied up in regulatory requirements like the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), leaving banks with fewer lendable funds and increasing competition for deposits.

Increased Competition:

• Banks face competition not only from each other but also from high-return equity-linked products.
• Investors are increasingly shifting to equity markets due to strong performance and rising financial literacy.

Impact on Liquidity Risk Management:

• Banks have attempted to bridge the credit-deposit gap by relying more on Certificates of Deposit (CDs).
• However, this increases their sensitivity to interest rate movements and complicates liquidity risk management, making the system more vulnerable to market fluctuations.

Need for Prudent Liquidity Management:

• Proactive liquidity management is essential. The RBI is reviewing the Liquidity Coverage Ratio (LCR) framework to address these emerging challenges, with plans for public consultations to refine the approach.

What Strategies Can Banks Use to Increase Deposit Growth?

Focus on Core Business:

• The Finance Minister of India emphasised that banks should concentrate on their primary functions of deposit mobilisation and lending, stressing that these activities are the "bread and butter" of banking.

Innovative Deposit Mobilisation:

• Banks were encouraged to be aggressive in deposit mobilisation by offering attractive and innovative products, leveraging the liberty given by the RBI to manage interest rates.

Flexible Products:

• Banks can consider reducing the lock-in period for tax-saving fixed deposits from five years to three years, making them more competitive with alternative investment options.

Incentives and Promotions:

• Offer attractive interest rates, bonuses, or cash incentives for new deposits to attract customers.

Technology:

• Banks can use data analytics to offer personalised savings and deposit products, making it easier for customers to manage and grow their savings.

Customer Engagement:

• Strengthening customer relationships through targeted marketing campaigns, and loyalty programs can encourage existing customers to increase their deposits and attract new customers.
• Conducting financial literacy programs that educate customers about the importance of savings and the safety of bank deposits can help in increasing deposit growth.

What are the RBI's New Liquidity Norms for HFCs?

New Liquidity Requirements:

• HFCs that raise public deposits will now need to maintain higher liquid assets to ensure financial stability.

Alignment with NBFC Regulations:

• Previously, HFCs operated under more relaxed prudential norms compared to NBFCs, particularly in terms of deposit acceptance.
• The RBI's new guidelines aim to eliminate these discrepancies treating HFCs similarly to deposit-taking NBFCs.

Mains Question:

Q. Evaluate the impact of the shift from traditional bank deposits to alternative investment avenues on the Indian financial system. What measures can banks take to retain and attract deposits?

GS2/Polity

Chinese Technicians for Indian Manufacturing

Why in news?

• Recently, a portal to facilitate the approval of short-term business visas for Chinese technicians has begun functioning. It is essential for operationalising production units and boosting output in sectors under the government’s flagship Production Linked Incentive (PLI) scheme.

Why does India Need Chinese Technicians?

Delay in Operationalisation of Machines:

• Domestic manufacturing firms have been raising concerns about delays in obtaining visas for Chinese technicians essential for tasks such as machine installation, repair, and training of Indian workers.
• Chinese technicians are sought after by Indian manufacturers as they are more affordable than technicians from other Western or even Southeast Asian countries.

Delay in Fulfilling Global Orders:

• Escalating tensions with China have reportedly cost Indian electronics manufacturers USD 15 billion in production losses and 100,000 jobs since 2020.
• The electronics manufacturing industry highlighted that India has also missed out on a USD 10 billion export opportunity and suffered a USD 2 billion loss in value addition.

Achievement of Atmanirbhar Bharat:

• Ensuring the availability of necessary expertise will help domestic manufacturing units enhance production capabilities, reduce dependence on imports, and maintain competitiveness in the global market.

Delay in Commencement of Production:

• The slow visa approval process has led to delays in the start of production across multiple industries. In sectors like textiles and leather, where there is significant potential, machinery has remained unused for months because Chinese vendors demand that only their personnel activate it.

Why was India Hesitant to Grant Visas to Chinese Technicians?

• The border standoff after the Galwan clash in 2020 led to several government measures aimed at limiting Chinese influence on the Indian economy.
• In 2019, Chinese nationals received 2,00,000 visas, but in 2023, the number of visas to Chinese personnel was down to 2000.
• The government also amended the FDI policy under Press Note 3 (PN3), 2020 bringing investments from land-bordering countries under the government route.
• India approved only a quarter of the total 435 FDI applications from China up to June 2023 since the modification in security-driven mindset has emerged among Indian policymakers. In 2024, even the meagre 1000 visas for Chinese electronics professionals are stuck in a “pipeline”, undergoing “intensive screening”.

How can India Utilise China’s Expertise for its Advantage?

Increase Chinese FDI Inflow:

• Economic Survey 2023-24 advocated attracting investments from Chinese companies to boost exports.
• Currently, China stands at the position with only a 0.43% share or USD 2.45 billion in total FDI equity inflow reported in India from April 2000 to December 2021.

China Plus One Strategy:

• The Economic Survey 2023-24 noted that countries such as Mexico, Vietnam, Taiwan, and South Korea are benefiting from the China-plus-one strategy pursued by Western firms.
• India can greatly benefit from the China Plus One strategy due to its large domestic market, competitive labour costs, and supportive government policies.

Integration with Global Market:

• China is the world’s second-largest economy, a manufacturing giant and a significant scientific and technological player. To boost Indian manufacturing, it is essential for India to integrate itself into the global supply chain, like China.

What is the Issue Associated with the Indian Industrial Workers?

Low Productivity:

• Chinese professionals are “highly productive.” According to Indian industry leaders, Chinese can help produce 150 items with the same resources with which Indians produce 100.

Skill Gap:

• There exists “a significant skill gap” between Chinese and Indian factory supervisors and workers. Indian businesses have acquired machines from China but struggle to use them effectively without assistance from Chinese technicians, as the local workforce lacks the necessary skills to operate them.

Poor Industrial Training Programs:

• Industrial organisations fail to provide on-job training to their workers focused on helping employees acquire knowledge to meet current industrial skill demand.

Irrelevant Curriculum:

• Educational and skill programs often do not align with current industry needs, leading to a gap between what students learn and what employers require. Without vastly upgraded domestic education, job-rich prosperity will remain a cruel mirage.

How can India Improve the Skill Development in the Industrial Sector?

Foreign Knowledge as a Catalyst:

• East Asian development story shows that foreign knowledge is crucial for economic growth. In the 1980s, Korean businesses bought foreign machines to dismantle and reverse engineer them.

Continuous Training:

• Providing continuous training within an organisation gives current employees an opportunity to enhance skills and abilities. It helps in adoption of new technologies and methods more streamlined.

Partner with Colleges:

• Reaching out to college students by opportunities for internships and apprenticeships give them an idea of relevant skills in demand.
• Industrial Visit:
• It allows workers to understand the procedures, processes, work environment, and management practices in other industries, as well as to learn about the latest technologies.

Educational Foundation:

• China began its explosive growth in the early 1980s. The quality of primary education in China established during the Communist era prepared the country for rapid development. Under National Education Policy, 2020, India should provide a robust educational foundation to its children.

World Class Levels of Learning:

• Since 2018, Chinese school students have bettered the world’s best in the Programme for International Student Assessment (PISA) conducted by the Organisation for Economic Co-operation and Development (OECD). India should upgrade its education system to ensure children achieve world-class learning standards.

Conclusion

• Despite the forecast of India becoming a global economic superpower, its prospects are dimmed by its failing education system and inability to provide dignified jobs. While it is important to address national security concerns, a balanced approach that encourages foreign expertise and simultaneously enhances domestic education and technical skills is essential.
• To compete in the intensifying global economy, India must urgently address its human capital deficiencies and realistic economic strategies to avoid worsening unemployment and underdevelopment.

Mains Question:

Q. Discuss the importance of foreign expertise and knowledge in the development of the Indian manufacturing industry.

GS1/Indian Society

Women and Men in India 2023

Why in news?

• The Ministry of Statistics and Programme Implementation has released the 25th edition of report titled. It offers a comprehensive overview of gender dynamics in India, covering data on population, education, health, economic participation, and decision-making involvement. It presents data disaggregated by gender, urban-rural divide, and geographical region to understand existing disparities in society.

What are Key Highlights of the 2023 Report?

• Population: By 2036, the population of India is expected to reach 152.2 Crores.
• Improvement in sex ratio: Sex ratio in India is expected to improve to 952 women per 1000 men by 2036 from 943 in 2011. Female percentage is expected to constitute 48.8% in 2036 compared to 48.5% in 2011. India's population in 2036 is expected to be more feminine.
• Age Demography: The proportion of individuals under 15 years is projected to decrease from 2011 to 2036, likely due to declining fertility. The proportion of the population aged 60 years and above is anticipated to substantially increase.
• Age Specific Fertility Rate (ASFR): From 2016 to 2020, ASFR in the age group of 20-24 and 25-29 has reduced. ASFR is defined as the number of live births in a specific age group of women per thousand female populations of that age group.
• Maternal Mortality Ratio (MMR): India has successfully achieved the major milestone of bringing down its MMR. Infant Mortality Rate (IMR) and Under Five Mortality Rate have also shown positive trends.
• Labour Force Participation Rate (LFPR): Both male and female LFPR have witnessed changes during the mentioned period, showcasing evolving trends in workforce participation.
• Participation in Election: Increased participation of women in elections reflects changing societal norms and political engagement.
• Women Entrepreneurship: Recognition of women-led start-ups indicates a positive shift towards gender equality in the entrepreneurial landscape.

What are the Challenges Associated with India’s Demographic Profile?

• Son Meta Preference: Skewed sex ratio and societal preferences pose challenges in gender equality and family dynamics.
• Aging Population: Rapidly aging population brings forth healthcare and social challenges that need strategic solutions.
• Disparity in Health Outcomes: Regional disparities in health outcomes highlight the need for targeted interventions in healthcare infrastructure.
• Barrier to Women's LFPR: Patriarchal norms and societal expectations hinder women's participation in the workforce, requiring policy interventions.
• Absence of Informed Choice in Elections: Educational gaps and biases influence electoral decision-making, impacting governance.
• Informal Women Entrepreneurship: Lack of formalization and support for women-led enterprises limit their growth potential and economic impact.

Way Forward

• Balanced Sex Ratio: Enforcement of laws and promoting awareness can help in achieving a balanced sex ratio and addressing gender biases.

• Handling Aging Population: Specialized healthcare and social programs can cater to the needs of the elderly population for a more inclusive society.

• Boosting Women's LFPR: Supportive policies and initiatives can enhance women's participation in the workforce, fostering economic growth and gender equality.

Mains Question:

Q. What are the various challenges associated with Indian demography? How can they be mitigated for sustainable development? Discuss.

GS3/Environment

Impact of Climate Change on Earth's Rotational Dynamics

Why in news?

• Recent research highlights that melting polar ice caps due to climate change are causing the Earth to spin more slowly, leading to minute changes in the duration of a day. This phenomenon, while not immediately noticeable in daily lives, could have significant implications for technology reliant on precise timekeeping.

How is Climate Change Affecting Earth's Rotation?

Melting Ice Caps:

• The melting of polar ice sheets causes water to flow towards the equator, increasing the Earth's oblateness and moment of inertia.
• Studies show that over the last two decades, the Earth's rotation has slowed by approximately 1.3 milliseconds per century.
• The principle of angular momentum explains this effect, as polar ice melts and moves towards the equator, the Earth's moment of inertia (mass distribution near the equator) increases, causing its rotational speed (velocity) to decrease to conserve angular momentum, resulting in a slower spin.
• Projections indicate that if high emission scenarios persist, this rate may increase to 2.6 milliseconds per century, making climate change a dominant factor in the Earth's rotational slowdown.

Axis Shifts:

• The melting ice also influences the Earth's axis of rotation, causing a slight but measurable shift.
• This movement, while small, is another indicator of how climate change impacts fundamental Earth processes.
• The Earth's rotational axis is tilted relative to its geographic axis. This tilt causes a phenomenon known as the Chandler wobble, which can affect rotational timing and stability.

What are the Implications of Slowdown of Earth's Rotation?

Leap Seconds:

• The rotation of the Earth affects the need for leap seconds to synchronize atomic clocks with solar time.
• A slowdown in rotation may necessitate the addition of leap seconds, impacting systems reliant on precise timekeeping.
• This adjustment can cause issues in technology, such as network outages or discrepancies in data timestamps.

Global Positioning Systems (GPS)

• GPS satellites rely on precise time measurements. Variations in Earth's rotation can affect the accuracy of GPS systems, potentially leading to minor errors in navigation and location services.

Sea Level Rise:

• The redistribution of mass from melting polar ice contributes to changes in sea levels.
• A slowdown in Earth's rotation can affect ocean currents, including the Global Mean Ocean Circulation (GMOC), potentially influencing regional climate patterns and exacerbating issues related to sea level rise.
• GMOC is a large-scale system that moves water, heat, and nutrients across the world's oceans. It plays a vital role in regulating global climate by redistributing heat between regions.

Earthquakes and Volcanic Activity:

• Although less direct, changes in Earth's rotation and mass distribution can influence tectonic processes.
• Variations in rotation might impact the stress distribution in Earth's crust, potentially influencing seismic and volcanic activity.

Climate Change Evidence:

• This phenomenon is a stark reminder of climate change's extensive impact, affecting not only weather patterns and sea levels but also the very mechanics of our planet's rotation.

Mains Question:

Q. Discuss the implications of climate change on Earth's rotational dynamics

GS3/Economy

CSR Expenditure 2023

Why in news?

• Recently, government data revealed that education received the highest share of corporate social responsibility (CSR) expenditure in FY23, with Rs 10,085 crore allocated, igniting a debate about uneven spending of CSR in a few sectors and regions.

Recent Developments in CSR Expenditure

• Total CSR expenditure increased from Rs 26,579.78 crore in FY22 to Rs 29,986.92 crore in FY23. The number of CSR projects rose from 44,425 to 51,966.
• Companies outside the public sector contributed 84% of the total CSR spend.

Sector Wise Expenditure

• Education accounted for one-third of the CSR spend in FY23.
• CSR spending on vocational skills rose slightly to Rs 1,164 crore in FY23 from Rs 1,033 crore the previous year.
• Technology incubators got the lowest amount, with only Rs 1 crore in FY23 compared to Rs 8.6 crore in the previous year.
• Health, rural development, environmental sustainability, and livelihood enhancement also received significant CSR funds. Animal welfare surged from Rs 17 crore in FY15 to over Rs 315 crore in FY23.
• CSR expenditure under the Prime Minister Relief Fund dropped to Rs 815.85 crore in FY23, down from Rs 1,698 crore in FY21 and Rs 1,215 crore in FY22.
• Contribution to disaster management fell the most (77%), followed by that on slum development (75%).

Region Wise Expenditure

• Maharashtra, Karnataka, Gujarat received the most CSR spends while North East states, Lakshadweep, and Leh and Ladakh received the least CSR spendings.

What is CSR?

• Corporate Social Responsibility in general can be referred to as a corporate initiative to assess and take responsibility for the company's effects on the environment and impact on social welfare.
• It is a self-regulating business model that helps a company to be socially accountable. By practising corporate social responsibility, companies can be conscious of the impact they are having on economic, social, and environmental factors.
• India is the first country to mandate CSR spending under clause 135 of the Companies Act, 2013, with a framework for identifying potential CSR activities. Unlike India, most countries have voluntary CSR frameworks.

Applicability

• CSR provisions apply to companies meeting any of the following criteria in the preceding financial year: Net worth over Rs. 500 crore, Turnover over Rs. 1000 crore, Net profit over Rs. 5 crore.
• Such companies must spend at least 2% of their average net profits from the last three financial years on CSR activities, or if newly incorporated, based on the average net profits from preceding financial years.

Types of Corporate Social Initiatives

• Corporate Philanthropy: Donations to charity via a corporate foundation.
• Community Volunteering: Company-organized volunteer activities.
• Socially responsible Business practices: Producing ethical products.
• Cause Promotions and Activism: Company-funded advocacy campaigns.

Issues Pertaining to CSR Compliance

• Geographical Disparity in CSR Spending: Spending is concentrated in industrial states like Maharashtra, Gujarat, Karnataka, and Tamil Nadu, while North Eastern states and Lakshadweep, Leh and Ladakh receive comparatively less funding, reflecting a regional imbalance.
• CSR Allocation Trends: MCA data reveals that nearly 75% of CSR funds are concentrated in three sectors: education, health (including sanitation and water) and rural poverty. Sectors related to Livelihood enhancement have very less spending.
• PSU vs Non-PSU Spending: Non-PSUs contribute 84% of total CSR spending, while PSUs account for the remaining 16%, highlighting a significant difference in CSR expenditure between the two sectors.
• Strategic Misalignment in CSR: Many companies have merged sustainability with business strategies, prioritizing profit margins over genuine social impact, thus undermining the true purpose of CSR.

Finding Right Partners

• Despite growing awareness about the significance of CSR compliance, the challenges remain in identifying the right partners as well as in selecting projects that are long-term impactful, scalable, and are self-sustaining.

Ways to Enhance the Effectiveness of CSR Expenditure

• Enhancing CSR Engagement and Oversight: Aligning CSR with local government programs like the ADP (Aspirational Districts Programme) can boost community participation and engagement, while the government should ensure effective CSR implementation, leverage AI for better oversight.
• NGOs can work along with companies in remote and rural areas to ensure successful implementation of CSR activities.
• Address Sectoral and Geographical Disparity: Need to invest in higher education, high impact technological and environment-friendly projects that focus on skill development and livelihood enhancement.
• Develop CSR programs for underserved regions, offer incentives for spending in less-funded areas or make a mandatory provision to address regional disparity in spending, and collaborate with local PSU vs Non-PSU Spending Disparity: Encourage to increase contributions, implement benchmarking, and promote joint CSR initiatives between PSUs and non-PSUs.

Company Roles and Governance

• Conduct regular reviews, set clear objectives, and update governance roles. Establish new SOPs for fund utilization, impact assessments, and detailed checklists.

Conclusion

• To maximize the impact of CSR, companies must move beyond mere compliance and embrace strategic alignment with local government programs, address sectoral and regional disparities, and ensure transparency and accountability, fostering stronger collaborations between PSUs and non-PSUs and investing in innovative, scalable projects, CSR can drive sustainable social change and contribute to India's long-term socio-economic development.

Mains Question:

Q. Describe how Corporate Social Responsibility can become a financing arm to address the socio-economic issues of society?