High deficit in social sector funding: Report – Times of India

NEW DELHI: Building a robust philanthropy infrastructure for all segments is critical for the next decade of India’s growth, according to a report by global consultancy firm Bain.
According to the report, India is facing a massive deficit in social sector funding, even though total social sector expenditure has seen a 12% annual growth from around Rs 10 lakh crore to about Rs 17. 5 lakh crore. It added that India is facing a deficit of Rs 8 lakh crore for 2020-21 and is likely to face a Rs 10 lakh crore deficit for 2025-26, if it wants to achieve UN sustainable development goals commitment.
The report said the central and state governments are doing 93% of the total spending in the social sector. But with increasing fiscal deficit and higher debt burden following the pandemic, government finances would be limited in the coming years. Therefore, private philanthropy would become essential to bridge the gaps. Total private philanthropic funding in India is estimated to grow at approximately 12% annually in next five years, riding on three main segments: Corporate social responsibility (CSR), family philanthropy, including ultra high networth individual (UHNI), high networth individual (HNI), and retail.
However, private foreign funding continues to contract because of regulatory barriers. However, corporate trusts can grow at 15-20% annually but still contribute a mere 2% of total private funding. CSR, driven by the compulsory contribution of 2% of profit mandate, has grown at 15% annually in six years from Rs 10,000 crore in 2014-15 to Rs 24,000 crore in 2020-21. Riding on rapid economic growth, formalisation, and more companies coming under its umbrella, CSR contributions are expected to grow at 19% annually to Rs 57,000 crore by 2025-26, which would be around 32% of total private philanthropy funding of Rs 1. 8 lakh crore, the report said.