Social enterprises (SEs) have the potential to make India’s spectacular growth story work better for its poor citizens. Currently, India’s rapidly growing economy has not managed to alleviate the extreme poverty of nearly half the country’s population that lives below the $1.25 per day poverty line. There are several reasons for this, including non-uniform infrastructure, low quality public good provision by the government (especially in health and education), and resource limitations. By employing innovative business models, SEs are addressing India’s vast development needs, while maintaining sustainability through viable revenue models. Simultaneously, this space is witnessing an increasing number of impact investors who are interested in supporting businesses with triple bottom line returns – that is, profits (or financial sustainability at the least), social impact, and environmental impact.
This report provides a broad overview of the SE landscape in India. It covers different sectors and for each highlights social and environmental needs, how SEs are addressing these needs, key barriers confronting SEs, and different enablers that facilitate the activities of SEs. Key insights from this report follow from the profiling of 120 Indian SEs. The Asian Development Bank (ADB) commissioned this report, which was carried out with the guidance of Durreen Shahnaz, Founder and Managing Director of Impact Investment Shujog (Shujog). The report aims to understand the broad contours of India’s SE space, and to gain an understanding of what SEs could potentially be listed on a proposed regional social stock exchange. Such an exchange would allow SEs to efficiently raise capital from investors in a liquid environment for their growth needs. Unlike traditional exchanges, the regional stock exchange would consider both social and environmental impact, as well as profitability factors.
For the purposes of this report, SEs are defined as organizations that have triple bottom line returns: namely they address social and environmental needs such as affordable health services and energy, and have a financially sustainable revenue model (or plan to become sustainable in the near future). It is important to note that the definition is not limited by legal structure. SEs may be registered as private limited companies, cooperatives, not-for-profits, trusts or other types of legal entities. However, the legal structure of an SE may have a bearing on the type of funds they can attract. Not-for-profits, for instance, cannot solicit equity investments, but can have access to debt capital.
By – Deeksha Awasthi (https://www.linkedin.com/in/deekshaawasthi/)