In the age of super disruption, CSR funds are better used to preserve middle class livelihoods

At a time when the country faces huge economic disruptions due to the Gulf war and also artificial intelligence-related technology, the Modi government should evaluate and reorient the scheme where companies have to contribute two percent of their net profits for corporate social responsibility (CSR) projects.

The issue is one of relative utility of CSR spends: are they better spent being invested in long-term social projects whose utility may be in some doubt, or on their own employees whose livelihoods may be threatened by economic disruptions, or even protecting themselves from other business threats?

With new AI tools like Anthropic’s Mythos (which can discover cyber vulnerabilities of legacy systems very quickly) now coming into the market (and bad actors may soon have access to similar tools), the possibility of losses stemming from malware and cyber attacks is no longer a distant threat. It is not just competition business need to worry about, but malicious attacks too.

In August 2025, Jaguar Land Rover (JLR) was devastated by a cyber attack which forced the company to shut down operations for more than a month, causing losses of more than £700 million, which, at current exchange rates, would work out to more than 8,800 crore. The losses to the extended JLR supply chain would be much higher, and its wider economic impact incalculable.

According to a report in Computer Weekly, “the UK’s Cyber Monitoring Centre has classified the JLR cyber attack as a Category 3 Systemic Event and set the wider economic cost of the incident at somewhere between £1.6bn and £2.1bn – and potentially up to £5bn – with almost 3,000 distinct UK organisations potentially affected.”

Malware is one thing, but general business disruptions can impact jobs even more. 

In 2026, the Indian tech sector laid off more than one lakh people, and even if we assume that some of them are unfit to stay in the job, it is still a huge number.

Let’s also note that the middle class, which depends on stable jobs in software services, banking and financial services, telecom and other such sectors, is the backbone of the economy. Each middle class employee who loses his or her job will indirectly impact all those who depend on them for domestic or personal work like driving their cars, walking their dogs, et al. The middle class’s spending also supports an entire range of platform workers who deliver food and essentials to homes and drive their taxis and autos. Work in retail businesses or logistics and warehousing, among other things, is also supported by middle class incomes.

According to Saurabh Mukherjea, an investment manager, the Indian middle class can be defined as taxpayers earning between Rs 5 lakh and Rs 1 crore annually, and there are approximately 40 million of them. And they could be supporting directly or indirectly another 200 million lower middle class workers. One can dispute the definition Mukherjea gives in his book titled Breakpoint: The Crisis of the Middle Class and the Future of Work, but whatever your estimate of the size of the middle class, they are crucial to the Indian economy as they contribute the bulk of the direct and indirect taxes. The book is co-authored by Nandita Rajhansa and Sapana Bhavsar.

The middle class is also the most stable customer of banks (for home, auto and personal loans), and the most important segment of buyers for home and other appliance makers.

Now, where will banks, businesses and small and medium enterprises be if this class starts shrinking or even stagnating?

The point is this: it is more important to preserve the jobs and spending power of the middle class than spending the same rupee on vague social projects. One can also presume that various non-government organisations have begun gaming the system now that corporate CSR udders are overflowing.

According to numbers put out by the government in response to a parliament question, in the five-year period 2019-24, close to Rs 4 lakh crore was available from this source for CSR activities, with 2023-24 alone accounting for Rs 34,908 crore.

Should this money be spent largely on protecting middle class jobs, or partially wasted in trying to fund vaguely-defined social responsibility projects? Remember, a middle class job that is saved helps not only the person concerned, but many others who may be dependent on his income to deliver products and services to his household.

This is not to suggest that companies should not lay off people, or restructure jobs based on market demand, just that the social cost of job cuts cannot be ignored when defining corporate social responsibilities.

All companies should be asked to earmark at least half their mandated CSR funds for preserving jobs not only in their own outfits, but also in their extended supply chains. These funds can be used to support families for a year, and retrain workers who lose jobs, and also offer interest-free credit to extended supply chains. If half of CSR funds are kept in liquid funds, the corpus will also grow over time.

Projects intended to serve wider social goals should, ideally, be funded by the exchequer or private philanthropy. Preserving jobs and livelihoods should be an important focus of CSR funds.