India is at the crossroads. After a decade of high GDP growth rates of around 7-9 per cent, the 2008 global recession poured cold water on the Indian growth story, in 2012-13, growth is expected to be a tepid 5 per cent. The growth post-liberalization, benefited the rich, (the increase in number of Indian millionaires was second only to China), and a newly created middle class. What of the rest? Most of India or 400 odd million people live on less than $1 a day. In the latest 2012 human development index (HDI) report, India languishes at 136, out of 187 countries .
The players who can affect positive change- the government and NGOs are trying, with varying degrees of success, but their interventions fall woefully short of what is needed to combat India’s pressing problems. Capitalism’s fruit was supposed to drop down to all, but the much touted trickle-down economics, hasn’t delivered. Income inequality has doubled in the last 20 years. Einstein said famously, “We can’t solve problems by using the same kind of thinking we used when we created them,” perhaps what is needed now is a business as unusual approach. This is where social enterprises (socents) can play a role. They use market-proven business practices to solve social and environmental problems. In the world of socents, business and philanthropy collide, and strive to create a more equitable and sustainable world. They may not be the silver bullet for all of India’s gargantuan problems related to agriculture, poverty, infrastructure, healthcare and education, but they may perhaps be our best bet.
With a business as unusual approach, socents are turning rice husk into electric power (Husk Power Systems), employing the power of the sun to bring light (Selco), bringing healthcare to rural areas (Vaatsalya Healthcare), introducing solar-powered ATMs to villages (Vortex Engineering), providing emergency ambulance services (Ziqitza Health Care), teaching English (EnglishHelper) and giving access to affordable potable drinking water. Socents are identifying markets and problems that have been ignored and solving them using innovative products and services. Most of the global case studies on successful socents are peppered with Indian examples.
Social entrepreneurship could also help India avoid the mistake China made with its growth. The Red Dragon’s phenomenal economic growth has come at the cost of air, water and soil pollution. Anger over pollution has replaced land disputes to become the chief cause for social unrest in China. Socents with their inherent vision of sustainable growth that is environmentally friendly are well equipped to balance growth with environmental concerns.
While India had made giant strides in the last decade in the area of social entrepreneurship, this is just the beginning and more is needed. Government needs to step up to the plate and make it easier for both foreign and domestic investors to invest in socents. A better regulatory framework, smoother taxation policies, creation of multiple investment bodies, using innovative investment vehicles like UK’s social impact bonds, co-investing in technology based socents, creation of a separate index like Singapore’s Impact Investment Index (IIX), are just some of things it needs to do.
One of the most interesting developments in the past few months has been the CSR bill proposed by the government where 2 per cent of profits for big companies will be used for social programmes that includes investment in social business ventures. This could be a huge boost for socents, and give them access to more than a billion dollars in precious capital, that is needed especially at the seed and early stages. Husk Power Systems, for example, benefited from the grant that it got from Shell Foundation in its early days of technology creation.
Growth in the next 100 years cannot follow the road that capitalism took us in the last century, the earth’s finite resources are already depleted, and the environment already reeling from over-exploitation. There’s already talk of social capitalism and creative capitalism in the US and Europe. India need not be far behind, and design its own version of capitalism, one that uses social entrepreneurship in abundance.