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Impact Exchanges - The Enabler of Social Development Goals

Indian Journal of Sustainable Development

Volume 8 Issue 1

Published: 2022
Author(s) Name: Sonali Ahuja Dua | Author(s) Affiliation: Gargi College, University of Delhi, Delhi, India.
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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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