Abstract
Social Enterprises (SEs) are key to uplifting backward
sections of the Indian society. While they comprise
both non-profit organisations (NPOs) and for-profit
organisations (FPOs), their pervasiveness can be
gauged from their sheer numbers and impact. For
example, there are nearly 31 lakh NPOs in India – nearly
one for every 400 Indians. These SEs are considered
instrumental in helping India’s citizens through social
and financial re-inclusion. Key to their success, apart
from operational aspects, are the financing aspects.
As these SEs assume greater importance in times
of severe disruption in the livelihoods of people due
to COVID-19, policymakers have been pushed into
exploring new ideas to support them. The Social Stock
Exchange (SSE) is such an idea whose time has come.
SSEs are exchanges similar to stock exchanges, but
where the SEs can list to raise funds. However, there
still remains the question of why SSEs are required
when the investors could directly search for the relevant
SEs. What would the SEs gain by listing on SSEs and
potentially undergo greater compliance checks and
regulations, when they could spend those resources
on their core activities? The first reason is that an SSE
listing would open the doors for the social enterprises
to new sources and alternative fundraising structures
that they have conventionally not been able to tap.
The second reason pertains to the investors in the
SEs who are equal stakeholders in the SE’s process.
The SSE listings are designed to aid both individuals
and corporations by offering better SE-discovery, SEevaluation,
and greater operating transparency in the
workings of recipient SEs. These are expected to make
individual and CSR investment decisions more efficient
and effective, thereby attracting more capital to the
overall pool. This research paper explores the concept
of the social stock exchange, social enterprises, social
finance, and impact investment. It focuses on the structure and operation of the social stock exchanges
across nations. The Indian Government’s proposal
for establishing an SSE in 2019 Union Budget has
also been covered in this paper. The paper further
considers the possible problems in setting up an SSE
for the social ecosystem in India. Finally, the author
proposes recommendations to help the SSE achieve
its prescribed goals.
Keywords: Social Finance, Impact Investment, Securities Exchange Board of India, CSR, Social Entrepreneurs, COVID-19
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