Catalytic CSR Key To Financing India's Viksit Bharat Ambition: Here's Why

India’s ambition to become a Viksit Bharat is no longer aspirational. It is now a time-bound economic question. How will the next phase of growth be financed and how will opportunity reach livelihoods, jobs, and enterprises at scale?

Corporate Social Responsibility (CSR) sits quietly at the centre of this debate. With discussions underway on possible amendments to India’s CSR framework, a new set of companies will enter the CSR ecosystem with little time to adjust.

They will need to meet compliance expectations while responding to pressing development needs. Yet the opportunity is clear. When aligned with markets, credit, and enterprise, CSR capital does more than spend. It multiplies.

Catalytic CSR represents a shift in how corporate capital is designed and deployed. Instead of funding outcomes alone, it focuses on unlocking markets, reducing risk, and mobilising additional capital. By absorbing risks that commercial capital cannot, catalytic CSR moves from supporting marginal impact to shaping systems at scale.

At its core, catalytic CSR responds to market failures not caused by a lack of demand, but by risk perceptions that outweigh returns. These gaps are most visible in financial inclusion, climate resilience, and informal entrepreneurship, where uncertainty persists despite strong fundamentals.

India’s informal enterprise credit gap illustrates this clearly. Nearly 60 million micro and nano entrepreneurs operate outside the formal financial system, facing an estimated $400 million shortfall in productive credit.

Over two decades, microfinance institutions and Self-Help Groups have enabled enterprise creation at scale. Yet many enterprises stall once they outgrow microloans. Growth requires larger, longer-term capital for assets, labour, and productivity, precisely where traditional microfi nance reaches its limits.

Research consistently shows that while microcredit supports entry, sustained income growth depends on access to productive credit. Without it, entrepreneurs rely on unpaid labour or costly informal borrowing, constraining scale and profitability. Banks remain cautious, given the absence of collateral, credit histories, and formal records. This is where catalytic CSR can intervene, not by replacing markets, but by enabling them.

Credit guarantees represent one of the most effective instruments for catalytic CSR in India. By offering partial risk cover, CSR capital can unlock bank lending to first-time and informal borrowers, enabling financial institutions to extend larger loans with longer tenures that would otherwise remain inaccessible.

India already has strong public infrastructure in this space. Sovereign guarantee mechanisms such as Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and National Credit Guarantee Trustee Company (NCGTC) have significantly expanded access to formal credit, with CGTMSE alone facilitating over Rs 4 lakh crore in guarantees to more than 10 million MSMEs. Yet, given the scale and diversity of informal micro and nano enterprises, public guarantees alone cannot meet demand.

CSR and philanthropic capital can complement these schemes by acting as de facto guarantees for excluded segments. When designed well, such structures reduce lender risk, lower borrower EMIs, discourage loan stacking, and enable responsible lending. The outcome is not just credit access, but enterprise stability and sustained income growth.

A common concern is whether catalytic instruments such as credit guarantees align with CSR compliance. Under the Companies Act, 2013, CSR obligations are met once funds are deployed towards eligible Schedule VII activities. In the case of credit guarantees, CSR contributions directly enable loan disbursement and economic participation, even if the guarantee corpus is not invoked.

Unused guarantee funds are not idle. They continue to serve a defined social purpose and can be redeployed towards other eligible CSR activities. From both legal and policy perspectives, credit guarantees are fully aligned with the intent of India’s CSR framework.

Over the past decade, CSR in India has delivered critical last-mile interventions across health, education, and livelihoods. The next leap lies in using CSR to mobilise multiples of additional capital, particularly for those at the base of the economic pyramid.

By absorbing risk, enabling credit, and activating markets, CSR can move from funding projects to powering economic engines, aligning corporate capital with India’s ambition for inclusive and sustainable growth, not as a future promise, but as a present opportunity.

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