Is Social Entrepreneurship the answer to India’s myriad social challenges?

According to a recent World Bank report, 1.2bn people are living in extreme poverty across the world, i.e. they earn less than $1.25 per day. Of these a staggering one-third or 400 million are in India. But at the same time India also is home to 55 USD billionaires[i], 16 million classified as rich and around 160 million considered middle class[ii]. The income inequality is huge and is the root cause behind many social ills.

So, whose problem is it? Those like me, who have grown up in India or lived there for a very long time tend to become immune to the poverty and deprivation all around us. We put the onus entirely on to the government, blame the system and relieve ourselves entirely of any responsibility whatsoever. But given the magnitude of the problem, there’s only so much that the government can do. And if we add to that mix, the inefficiency and corruption that is so rampant in India, there’s not much one can expect from even the very well meaning government initiatives.

Enter corporate India - with all its might, resources and most importantly the huge pool of talent and passion, and we can only imagine the impact it can make. There are around 1.6 million registered companies and another 26 million unregistered businesses in India[iii]. What if every one of them, big or small, transformed themselves into social businesses and addressed the various social issues in their own way? Well, it’s a bit far-fetched, but just imagine, even if 10% of these, i.e. 2.8 million companies turned into true crusaders and touched 100 lives each, they alone could change the world for 280 million Indians.

Well, coming back to reality, India’s Rajya Sabha (the Upper House) recently passed a new Companies Bill that would make it mandatory for all companies with over $200m turnover or a net profit of a minimum of $1m to spend at least 2% of their net profit on CSR. This is absolutely laudable and according to analysts, will increase CSR spending of just the top 100 companies alone from $265m currently to $850m and increase the overall CSR spend of corporate India to anything between $3bn to $5bn.

However, rather than just being driven by a legal mandate, the need of the hour is for every corporate, big or small to take up a social responsibility and have social objectives woven into the very DNA of their existence taking the cue from the emerging breed of social entrepreneurs.

So what is social entrepreneurship? Unlike traditional entrepreneurs, social entrepreneurs are driven by a social cause rather than the need to maximise shareholder value. But that does not mean they are charities or grant funded loss making enterprises. Many of them have raised commercial capital and have sound business models. They do make profits, but plough back most of it to meet their social objectives. One such example is Dr. Devi Shetty’s Narayan Hrudayalaya which provides low cost and quality cardiac care and uses the profits made from the more well-to-do patients to provide free surgeries to the poor.

Social entrepreneurs may not be able to solve all of society’s problems, but they do present a much better alternative to the corporate model that is driven by greed and has led to the current economic crisis. They are currently small in numbers, but have presented a unique model that could offer lessons in development to government and companies alike and may well be the answer to many of India’s social ills.

Neeraj Agarwal is the Co-founder and CEO of Tea People (www.teapeople.co.uk), a UK based social enterprise that uses the profits generated from selling fine speciality teas, to help educate underprivileged children in the tea growing areas. Neeraj holds an MBA from the University of Cambridge and prior to starting Tea People, he built and ran an IT education company in India and worked for organisations like the SIE, UKIBC and UKTI in the UK.