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Q 85- Discuss the primary features and benefits of the parliamentary form of government and analyze why India chose it. (250 words)

  • Paper & Topic: GS I à Indian Society

 

  • Model Answer:

 

  • Introduction:

 

  • A social stock exchange (SSE) is a platform where social enterprises, volunteer groups, and welfare organizations can list themselves in order to collect funds.
  • On a single platform, it will bring together social enterprises and impact investors.
  • In the 2019 budget, the Finance Minister said that the government intends to establish a social stock exchange (SSE). In India, the SSE will be regulated by SEBI.

 

  • Body:

 

  • Background:

 

  • In this regard, in September 2019, the Securities and Market Board of India (Sebi) established a 15-member working group on a social stock exchange (SSE).
  • According to a June 2020 study by Sebi's SSE working group, India has at least 3.1 million non-profit organizations (NPOs), which is more than double the number of schools and 250 times the number of government hospitals.

 

  • Civil Society Implications of Social Stock Exchanges:

 

  • The plan has gotten a lot of attention, and social entrepreneurs, among others, have argued that it may revolutionize how they raise money from investors.
  • The exchange will assist social and voluntary organizations that work for social issues in raising funds in the form of stock, debt, or mutual fund units.
  • It's a fantastic idea for the government to invest some resources in the construction of a facilitating institution.
  • Because the government is wary of foreign donations to nonprofits, the exchange might assist the sector raise funds.
  • In a society marked by glaring inequality and strong economic growth, the plan would be a daring experiment.
  • The exchange, if established, may provide new and cheaper sources of funding for social welfare initiatives while also demonstrating India's independence from foreign aid as it attempts to improve its global standing.
  • SSEs exist in multiple nations in various forms, but the Indian version's trading, tax benefit transferability, and third-party accountability remain unclear.

 

  • Factors to consider if this unique notion is to be successful in India:

 

  • Non-profit organizations (NPOs) would have to demonstrate the measurability of their efforts as well as establish "primacy of social impact."
  • For-profit social businesses appear to be any organization "in corporation structure, partnership, or sole-proprietorship firm" that creates a social impact as part of its business (FPEs). This is a gray area that could be abused, thereby reducing the flow of cash to non-profits.
  • The SSE aims to promote openness in the NPO sector by requiring increased financial, social, and governance reporting. While this is a worthy goal in and of itself, procedures that rely on information risk leaving smaller NPOs out of the SSE's scope.
  • It also runs the danger of alienating organizations whose efforts and/or influence aren't easily quantifiable. NPOs working in environmental justice, digital rights, or other areas where existing institutions and processes are stacked against them, for example.
  • While the SSE technical committee establishes rules for social auditors, intermediaries agencies are feared to develop.
  • Given the proposals' lack of regulatory checks and balances, such agencies may gain unfettered power over the SSE-NPO-donor ecosystem. This may be contrary to the spirit of the concept.
  • The fine line between controlling non-profits to prevent them from abusing the flexibility they have been granted and allowing for a broader range of fund-raisers who go beyond a small set of easily verifiable objectives is a delicate one that will require a lot of work as the plan is implemented.

 

  • Steps to take/Conclusion:

 

  • The government must first establish how to distinguish between a social company and a traditional business.
  • It would be novel if corporate social responsibility monies could be channeled through the exchange to social enterprises.
  • This can help organizations route funding through a more viable path and avoid misuse of CSR monies.
  • The notion of a Social Stock Exchange is a good one, but it need further thought and collaboration with all stakeholders.
  • Some of these crucial choices taken at the outset will determine its realization and eventual worth to these stakeholders, particularly non-profits.
  • The Social Stock Exchange is a positive move toward assisting cash-strapped social enterprises. This will help to advance the cause of socioeconomic development while also providing a high level of openness and accountability.
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