Budget 2019: Analysts terms listing of social enterprises as innovative, move would help them raise funds to meet welfare objectives

New Delhi: Allowing listing of social enterprises can be a game changer for organisations that are trying to transform the social dynamics, say market analysts who termed the Budget proposal as one of the “very creative and innovative ideas”.

This proposal would help social enterprises to raise funds through equity, debt or as units like a mutual fund to meet social welfare objectives, they added.

Finance Minister Nirmala Sitharaman proposed to “initiate steps towards creating an electronic fund raising platform — a social stock exchange — under the regulatory ambit of 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”.

“This is one of the very creative and innovative ideas which is now going to be a reality. FM has put up this idea and we believe this can be a game changer for specifically those social enterprises and organisation that is actually trying to change the social dynamics.

“They are in need of funds at times despite government measures. This would actually enable them to fund their organisation for social causes. This is a welcome move,” Mustafa Nadeem, the CEO of Epic Research, said.

The minister in her Budget speech said, “It is time to take our capital markets closer to the masses and meet various social welfare objectives related to inclusive growth and financial inclusion.”

“We share and commend the idea of the Finance Minister towards taking capital market closer to common people and introducing the concept of social stock exchange for social welfare schemes under the able guidance of capital market regulator Sebi,” said Sanjit Prasad, MD and CEO, ICEX (Indian Commodity Exchange).

Jayant Manglik, president, retail distribution, Religare Broking Ltd, said, “The Finance Minister announced the creation of social stock exchange to enable the listing of organisations that work for social welfare on the exchange, similar to the way that private firm lists on stock exchanges.”

“This proposal seems to be an encouraging move, as it would help social enterprises/NGOs to raise funds through equity, debt or as units like a MF to meet social welfare objectives. This step would clearly stimulate governance in the social sector,” he added.

Social stock exchanges promote socially valuable objectives and a reasonable financial return, according to Joseph Thomas, Head of Research, Emkay Wealth Management.

“It will serve as a platform for fund mobilisation for ventures which may have an overriding social purpose, which is sustainable and reflective of the changing social attitudes towards impact investing,” he said.