Developing a roadmap of social enterprise ecosystem as a precursor for a viable social stock exchange in India
With an increasing demand for capital by social entrepreneurs in India, setting up a Social Stock Exchange (SSE) can help create an ethical and transparent investment environment in India and boost the availability of funding to them. Compared to traditional stock exchanges, SSEs give social enterprises much greater control over social and environmental mission. Social enterprises have to be oriented towards revenue generation and financial sustainability (while ensuring that social purpose is primary), robust governance and measurable social impact in their functioning. GRAAM has thus taken up a secondary data, based study to extensively analyse the social enterprise system in India, identify its gaps and challenges and suggest the appropriate legal form for Social Enterprises.
|Project Name||Developing a roadmap of social enterprise ecosystem as a precursor for a viable social stock exchange in India|
|Project Sanction Date||01 Dec 2019|
|Project Period||Dec 2019 to Apr 2020|
|Project Supported By||
|Implementation Partner||Learning, Skill Development and Livelihood|
Define Social Enterprise in the Indian context. Map the existing status of the Social Enterprise system in India. Define the role of the Government and enabling regulatory support needed to promote social enterprise. Provide a detailed roadmap for the development of a Social Stock Exchange in India and highlight the role of NABARD in the same.
Project Result / Accomplishments:
• Since existing laws in India do not explicitly permit enterprises to be set up for social purposes and provide returns for investors, a separate hybridized legal entity will need to be conceived and set up. One such model that India can learn from is the CIC (Community Interest Company) variant in UK. o On the supply side, there is a need for a critical mass of social investors who are willing to consider social impact and not just financial returns in their investment decisions. The participants may include corporates, High Net Worth Individuals (HNWIs), Philanthropic Trusts, Venture Capitalists or even the Government. There is also a need to create fiscal incentives to incentivise these investors in terms of tax breaks apart from other non-monetary incentives. o Partnership with a traditional/commercial stock exchange would make for greater efficiency in the setting up of the infrastructure of SSEs including technological systems and framework of trading rules and listing rules, though care must be taken to preserve the autonomy of SSEs. o Given its extensive linkages with actors on the demand and supply side ecosystems, NABARD can play pivotal roles in constituting and running the SSE such as mobilizing Social Enterprises and investors, providing regulatory input, participation as Venture Capitalist and Equity Partner and social impact assessment.