Challenges Faced By Social Entrepreneurs In India

Challenges Faced By Social Entrepreneurs In India India achieved an average growth rate of 7.7% from 2002-07; however the dividends of this growth have not trickled down to the bottom of the pyramid (Planning Commission of India 2007). According to UNICEF, 42% of India’s population is below the international poverty line of US$1.25 per day (UNICEF 2005).   [ 1 ]   India’s Eleventh Five Year Plan (2007-12) aims to reduce the head-count ratio of consumption poverty by 10 percentage points. However, to solve complex problems such as poverty the government, business and citizen sector need to work together and create innovative solution to pressing problems. In fact, Indian government has recognized the positive impact of citizen sector and has provided increasing levels of funding, under the five-year plans. It is estimated that India has 1.2 million to 1.5 million Non-Governmental Organizations (NGOs) operating currently. The purpose of this paper is to highlight the legal, tax and regulatory challenges faced by soc ial enterprises and recommends policy action. The paper is organized as follows: Section II puts forward a definition for social entrepreneur; Section III features two pioneering social entrepreneurs; Section IV focuses on the challenges faced by social entrepreneurs in India; and Section V provides recommendations to counter these challenges. II. DEFINITION OF SOCIAL ENTREPRENEUR Social entrepreneurs are not the creation of the modern society. Historically, individuals and groups have combined the concept of entrepreneurship with social value creation to transform a current state of ‘unjust equilibrium’ for a targeted group of society (Roger and Osberg 2007). For example, Florence Nightingale built the foundation for the modern nursing profession at a time when nursing was not considered a respectable profession and lacked any codes, ethics and formal training. Further, this phenomenon was not limited to the developed world even the developing world had its share of so cial innovators. In 1920s, Jamnalal Bajal, founding father of a successful Indian enterprise Bajaj Group   [ 2 ]   , popularized the importance of business ethics and launched social initiatives to eradicate the malice against ‘untouchables’ in Indian society. While social entrepreneurs have existed throughout history, the concept of social entrepreneurship is a relatively recent one. Drawing from social entrepreneurship literature, following are five key components of the concept: (1) creating social value that transforms the lives of those who lack the capacity to change the social and economic ecosystem (2) recognizing and capitalizing on the opportunity embedded in the current state of affairs (3) innovating and dislodging the present system of doing things (4) willing to take risk in this process and undeterred by scarcity of resources (5) forging a new, stable equilibrium that uplifts the lives of the targeted group and expanding this cycle to other geographic al locations (Peredo and McLean 2006) (Roger and Osberg 2007) (Bolton and Thompson 2004). Having emphasized the social entrepreneurs of the past, it is fitting to draw attention to their modern counterparts. III. SUCCESS STORIES OF INDIAN SOCIAL ENTREPRENEURS Vikram Akula, SKS Microfinance In 2006, Vikram was named by TIME Magazine as one of the world’s 100 most influential people and was awarded Social Entrepreneur of the Year by Schwab Foundation. Vikram recognized that the traditional banking institutions in India failed to reach out to millions of poor due to lack of collateral and high transaction cost; forcing the poor to be trapped in the vicious cycle of small debt-heavy interest by exploitative money lenders.