Thanks to the stories of corporate frauds and scandals coming out of t

Pre-thinking - The government has now encouraged companies to spend more time, money and spirit on corporate social responsibility (CSR) projects. An additional information given in the last line of the paragraph also tells us the the government had launched certain norms last December and is now relaunching them with greater stress on what companies should be doing rather than forcing companies to do so.
Hence we see that the government assumes that if a company is involved in CRS it will help to curb / control corporate frauds and scandals.

A. Companies do not do CSR unless there is some incentive for doing so, and hence government needs to intervene.

This is an incorrect assumption and out of scope to the conclusion.

B. Indulging in CSR activities is likely to improve the public perception of the company.

This is an distortion. While the passage talks about the deteriorating public perception and its relation to the frauds and scandals, the government's intention is not to improve the public perception.

C. Voluntary norms on CSR will help to control corporate frauds and scandals.

This is a correct assumption. Note that the passage tells us how the government is encouraging the companies to to spend more time, money and spirit on corporate social responsibility (CSR) projects rather than mandating them to do so.

D. CSR activities will be useful in achieving inclusive growth in the nation.

The conclusion has nothing to do with the growth of the nation. Hence this is out of scope.

E. CSR activities affect the profitability of the companies.

Out of scope. Also, affect can mean either increase or decrease in profitability.