The Budget’s increase in allocations to healthcare (up by 2.71 per cent year-on-year) and education (up by 8.24 per cent y-o-y) are simply not enough to provide quality healthcare and education to all sections of society, particularly those at the bottom of the pyramid.

Fiscal constraints, however, leave the government with little manoeuvrability to increase social sector outlays substantially. Here, CSR can make a difference.

The current mechanisms to leverage the markets and private companies have been limited to mandatory 2 per cent (of profits) CSR contributions, pegged at over ₹25,000 crore (as per 2021 data). While compliance has been high, these funds have failed to inspire innovative solutions from the private sector, partly driven by the law which states that the CSR spend can’t benefit the company’s main operations.

However, available data shows that the private sector plays a much larger role in the healthcare and education sector than the government.

The government should therefore aim to incentivise markets to innovate affordable services for the low-income households. A mere 10 per cent shift in the market activity will do more to the cause than the full Budget outlay.

The government, therefore, must co-opt the private sector to leverage not only their innovation skills, technology, and capital resources but the private sector’s particular strength in identifying needs and developing economically sustainable solutions.

However, such endeavours are generally highly uncertain and costly. Allowing companies to leverage CSR funds for such experiments may incentivise companies to take on these risks. This will need a reform of the current CSR law.

Shared value (creating value for society and shareholders) activities can bring the full forces of markets to bear on the social problems we face. Examples of such solutions exist both in India and other developing countries.

Novartis, for example, has used the shared value strategy to increase access to medicine in rural India through its Arogya Parivar initiative. This involves free health camps and use of generics manufacturers to produce low cost drugs in smaller package sizes to make products more affordable.

The way forward in India could be to allow companies operating in priority areas like healthcare and education to use their CSR funds on shared value activities that impact their business.

The writer is MD India and Head Asia, FSG