Prabhat Pani is the Executive Director of the Centre for Innovation in Sustainable Development at SPJIMR.
Vyankatesh Kharage, a SPJIMR alumnus, is the Founder & Director of Asude Foundation.
India has made a significant commitment towards attaining the UN-declared Sustainable Development Goals (SDGs). Endorsements in various international forums have borne this out since late 2015. In 2022, India took on the role of the G20 Presidency. It specifically exhorted accelerating progress on SDGs at the crucial midpoint of the 2030 Agenda, acknowledging the detrimental impact of COVID-19, which has altered the planned ‘decade of action’ into a ‘decade of recovery’.
According to the India Philanthropy Report 2023, India’s social sector spending increased from 8.6 per cent in FY 2021 to 9.6 per cent in FY 2022. This increase was due to a 35 per cent growth in public expenditure, which is significant for a COVID-affected developing economy. Despite this progress, India is still far from NITI Aayog’s estimated 13 per cent of GDP as the total annual funding needed to achieve the SDGs by 2030.
A potential solution for India to bridge the resource gap and address these challenges is to promote social enterprises that drive inclusive and sustainable economies.
Social enterprises aim to create social and sustainable value while generating profits. They can operate in every sector – education, healthcare, agriculture, energy, sanitation, waste management, livelihoods, etc. They can also adopt different operating models – for-profits, non-profits, cooperatives, or hybrids.
Social enterprises create impact by addressing the needs and aspirations of underserved communities while contributing to the economy. They can provide affordable and quality products/services and create employment and income opportunities that improve the lives of low-income groups.
Why India Needs Social Enterprises to Foster Inclusive and Sustainable Economies
Innovation and Collaboration
Social enterprises bring innovative solutions, leveraging the entrepreneurial spirit to address societal problems effectively. These enterprises often work closely with communities, NGOs, governments, and Corporations to create meaningful partnerships that drive high and collective impact.
TeachforIndia, a non-profit organisation, aspires to build a movement of 50,000 leaders in Education in the next decade, who will work collectively, with compassion, to transform the lives of 1 in 10 children from low-income communities in India. They are driven by the vision of an India free of poverty and filled with compassion, and they visualise education as the route to achieving this vision.
Addressing Social Challenges
India has recently surpassed China as the most populous country in the world. It continues to face social challenges such as poverty (NITI Aayog has reported that 135 million Indians have moved out of multidimensional poverty from 2015-16 to 2019-21), unemployment, inadequate healthcare, and education disparities.
Social enterprises create impact by addressing the needs and aspirations of underserved communities while contributing to the economy. They can provide affordable and quality products/services and create employment and income opportunities that improve the lives of low-income groups.
For-profit social enterprise, Haqdarshak is best known for its government welfare scheme linkage at the last mile, using well-trained women support agents or ‘Haqdarshaks’ for facilitating applications. They use an assisted-tech model providing offline and online doorstep support, using their tech platforms.
Inclusive Economic Growth
Social enterprises prioritise inclusivity by creating economic opportunities. They can create jobs in rural areas by providing training and employment opportunities and supporting local supply chains.
FabIndia, a mature for-profit social enterprise, links over 55,000 craft-based rural producers to modern urban markets, creating a base for skilled, sustainable rural employment while preserving India’s traditional handicraft traditions.
Significant funding is available to do social good which social enterprises can leverage to build bridges by working at the intersection of government, businesses, Foundations, civil society, and communities. Over the last five years ending 2022, family philanthropy has grown 12 per cent, reaching $3.6 billion (Rs 29,600 Crore), driven by HNIs/affluent givers, retail giving by 6 per cent annually, with contributions reaching $4 billion (Rs 32,700 Crore), and CSR spending has grown at 13 per cent, reaching $3.3 billion (Rs 27,000 Crore).
Environmental Sustainability
India faces pressing environmental challenges such as climate change, natural resource depletion, and pollution. Social enterprises embrace sustainable practices and embed environmental considerations into their business models. They promote eco-friendly technologies, renewable energy solutions, waste management systems, and sustainable agriculture practices.
Bengaluru-based social enterprise, PotHoleRaja, is dedicated to raising awareness for accident-free roads, reducing back pain, save lives, and fuel by constructing better-designed pothole-free roads. The organisation utilises waste plastic as a sustainable component in its road-building efforts. PotHoleRaja receives support from many large corporations as part of their Corporate Social Responsibility (CSR) initiatives.
Mobilising Impact Investment, Philanthropy, and CSR Funding
The critical drivers of social enterprises are impact investment, philanthropy, and CSR.
Impact Investment is where investors allocate capital to generate financial returns and positive social outcomes. India implemented its first Development Impact Bond in education in Bhilwara, Rajasthan. Under the regulatory ambit of SEBI, the Social Stock Exchange (SSE) has commenced registering social enterprises and voluntary organisations working on the realisation of a social welfare/environmental objective so that they can raise capital as equity, debt or units like mutual funds. The first voluntary organisation listed in the SSE was in December 2023.
Significant funding is available to do social good which social enterprises can leverage to build bridges by working at the intersection of government, businesses, Foundations, civil society, and communities. Over the last five years ending 2022, family philanthropy has grown 12 per cent, reaching $3.6 billion (Rs 29,600 Crore), driven by HNIs/affluent givers, retail giving by 6 per cent annually, with contributions reaching $4 billion (Rs 32,700 Crore), and CSR spending has grown at 13 per cent, reaching $3.3 billion (Rs 27,000 Crore).
By leveraging innovation, entrepreneurship, and social impact, social enterprises can address some of the most pressing problems facing India’s development, and close the resource gap towards attaining SDGs. However, they also face significant challenges that limit their growth and impact. Therefore, there is a need for more support and recognition from policymakers, investors, and other stakeholders to enable social enterprises to thrive and help transform India’s economy into a more inclusive and sustainable one.
Job Creation
By creating employment opportunities, social enterprises can help reduce poverty, improve livelihoods, and enhance the economic well-being of individuals, families, and communities, especially in regions with high unemployment, by offering stable employment and fair wages in underserved areas.
The Mann Deshi Mahila Sahakari Bank is dedicated to addressing the lack of access to formal financial institutions. It aims to provide a safe space for rural women to save money. The Mann Deshi Foundation supports the Bank by addressing needs beyond financing, such as building business skills and facilitating market access for women entrepreneurs.
Financial Sustainability
Social enterprises have the potential to become self-sustaining through revenue generation, especially when scaled up and well-managed. As they generate their own revenue, they can attain greater financial stability and independence. Moreover, they may even produce surpluses that can be used to facilitate the establishment of new social enterprises, creating a virtuous circle.
Professional Opportunities for Social Good
Social enterprises can also attract a different category of entrepreneurs – graduates from top business and engineering schools. These individuals bring their skills and expertise to the table, fostering innovation and growth in social enterprises. With their business acumen and technical knowledge, these entrepreneurs can help develop new products and services that address social and environmental challenges. This could also help attract investment and support from a wider range of stakeholders, beyond the traditional.
Conclusion
By leveraging innovation, entrepreneurship, and social impact, social enterprises can address some of the most pressing problems facing India’s development, and close the resource gap towards attaining SDGs. However, they also face significant challenges that limit their growth and impact. Therefore, there is a need for more support and recognition from policymakers, investors, and other stakeholders to enable social enterprises to thrive and help transform India’s economy into a more inclusive and sustainable one.
