Public goods are meant to produce certain desirable outcomes. It is important these outcomes are quantified to the extent possible. No wonder many national governments come out with outcome budgets along with overall government balance sheet accounts annually. GoI, too, started this practice a few years ago, though there is no cogent evidence of a critical review of the measured outcomes leading to a prompt reprioritisation of public expenditure.

Public expenditure is public good in itself, but it also catalyses formation and assimilation of public goods in assorted forms like public infrastructure and social welfare schemes. The private sector, too, contributes in great measure to nation-building, often as the largest taxpayers and job creators. But it doesn’t end there. Corporate firms making profits need to partner with both government and non-government organisations (NGOs) at various levels, and civil society in a more direct manner to improve the lives of people.

We live in times when we need to establish what difference one makes by doing good things, and possibly by how much. Corporate social responsibility (CSR) rules now make it mandatory that a CFO signs on a business responsibility and sustainability reporting document that aims to measure up mandatory CSR spends in terms of real impact it has made on the ground. By introducing Section 135 in the Companies Act, 2013, India became the first country to have statutorily mandated CSR for specified companies. This goes a step ahead of that. This new rule of impact assessment reporting comes at a time when the pandemic has taken a hefty toll on CSR spends — down from Rs 24,688 crore in 2019-20 to Rs 8,828 crore in 2020-21, a 64% slump. According to the January 2021 amendment, impact assessment is mandatory for companies with a CSR budget of Rs 10 crore or more in any financial year and all projects with outlays of Rs 1 crore or more, and they must be undertaken by an independent agency. Impact measurement is, indeed, the most effective way to enforce a CSR obligation.

It’s only that qualified impact measurement tools and agencies are needed to execute this, since GoI is not offering any of its research organisations to get involved with this line of work. A leading impact assessment agency that did work for a tyre manufacturer estimated that 60% of women sampled in Vadodara enhanced their monthly income substantially following the company’s financial inclusion drive via CSR.

Those who had a monthly household income of Rs 5,000 moved up to Rs 10,000, while 13% of them moved even beyond. Similar projects were initiated in Kottayam, Kerala, by the same company where household incomes got elevated substantially. This underlines the need to quantify real impact made on the ground by CSR projects. Okha in Gujarat saw a mass movement on women empowerment, where a Tata Group company helped women in the village to commercialise Okhai handicrafts.

CSR projects would assume a new dimension when these impacts are measured and documented in a regulatory framework, so that it would become relatively easy for new entrants to design their initiatives. An Odisha-based organisation transformed the lives of 50,000 farmers already in two remote villages of Odisha by providing rainwater harvesting solutions and solar-fuelled motor pumps for irrigation.

The organisation stood out for effective use of natural resources to not only solve water issues but also to reduce environmental impact. Now it needs more funds to replicate this workable model to other villages of Odisha facing similar issues. It is here where the CSR impact assessment clause finds its rightful objective.

Ultimately, impact assessments also help funders, grant-givers and corporations to understand and evaluate the impact of their CSR investments. This helps them make better, evidence-based decisions to ensure sustainability and good governance.