Budget 2019: FM proposes creation of a social stock exchange
Union Finance Minister Nirmala Sitharaman, during her Budget speech, proposed a stock exchange that will allow social enterprises and voluntary organisations to raise capital in the form of equity or debt.
The Union Budget has laid out a very creative financial roadmap for the social enterprises and voluntary organisations in the country by proposing a Social Stock Exchange similar to other bourses in the country.
This will pave way for the social enterprises and voluntary organisations to list on a stock exchange, which is dedicated exclusively for them and raise capital just like any other corporate.
Sitharaman said, “I propose to initiate steps towards creating an electronic fund raising platform – a social stock exchange - under the regulatory ambit of Securities and Exchange Board of India (SEBI) for listing social enterprises and voluntary organisations working for the realisation of a social welfare objective so that they can raise capital as equity, debt or as units like a mutual fund.”
The rationale, according to the Finance Minister, will be to take the capital markets closer to masses and meet the various social welfare objectives related to inclusive growth and financial inclusion.
Social enterprises and voluntary organisations are an important component of the Indian economy, which focuses on areas such as education, health, water conservation, sanitation, poverty alleviation, housing, etc.
The government had also initiated the Swachh Bharat Abhiyan in 2014, and the Finance Minister said more than 5.6 lakh villages have become open defecation free.
“We have to build on this success. We must not only sustain the behavioural change seen in people but also harness the latest technologies available to transform waste into energy. I now propose to expand the Swachh Bharat Mission to undertake sustainable solid waste management in every village.”
The government has now mandated that corporates now have to spend two per cent of their annual profit on corporate social responsibility (CSR).
However, founder of a social enterprise told YourStory that they would wait for further clarity on how exactly the government proposes to set up this specialised stock exchange.
(Edited by Megha Reddy)