Social entrepreneurs can boost the India story

To build a more conducive and inclusive ecosystem for social enterprises, the government’s support is really crucial

To improve India’s standing with the World Bank which ranks countries on their Ease of Doing Business, the government has appointed the United Nations Development Programme and the National Productivity Council to brief relevant stakeholders about the reform initiatives taken to mend the business climate in the country.

India has a successful business environment, but with this prosperous institutionalisation comes an aversion to innovating. While the business sector has moved by leaps and bounds where the whole country chants ‘Digital India’, there are still gaps — gaps in jobs, gaps in talent and gaps in services that lead to our nation’s most deprived still being mired in poverty. This is where social entrepreneurs, especially India’s youth, can play a big role.

A social enterprise is privately owned, it addresses a social problem, in many cases in an innovative way, and operates in a reasonable profit format. Its success is judged in terms of a triple bottom line — fulfilment of social purpose, moderate profit and (environmental) sustainability. It is a disruption of the status quo, which fosters innovation and develops sustainable business ideas to solve pressing societal issues. For social entrepreneurs, it’s not about the balance sheet alone, but it’s not charity either.

The concept has grown enormously in North America and Europe and is gaining momentum in Africa. Several European countries have enacted legislation to promote and nurture social enterprises. The UK has designed financial instruments such as social impact bonds to give support to the sector. In India, Sebi brought in the Alternative Investment Funds Regulation to support social ventures.

To build a more conducive and inclusive ecosystem for social enterprises to flourish, government backing is vital. Social enterprises should, in fact, be natural allies for governments to partner with, as their primary goal is to improve the lives of the marginalised with minimum to no strain on available resources. But social enterprises being a rather nascent sector in the Indian economy, may not have the attention it needs and deserves from the Centre that’s probably unaware of their potential, nor understands how their needs differ from private partnerships or NGOs.

The biggest challenge India is staring at today, is to define and provide a legal framework for ‘social enterprises’. Currently, considering the above method of operation in hybrid model we have organisations existing in both not-for-profit mode and forprofit mode. This form is referred to but not adequately examined.

The current crop of social enterprises work in not-for-profit mode and can only access grants but cannot work with the aim to create marginal surplus/ profit since their core is to be non-profit. They are unable to access social venture funds which largely invest in social businesses for impact. Here, the scale and impact is compromised if the not-for-profit proves the model and creates a market.