India’s rich loosen purse strings for philanthropy, but not enough

India’s private sector – comprising corporate entities, ultra high net worth individuals (UHNIs), and a burgeoning middle class – has significantly stepped up their contribution towards social sector funding over the last five years, finds the latest edition of the India Philanthropy Report 2019 released by Bain & Co. on Friday.

But the rate at which social sector funding – including private funding and public expenditure – is growing is hardly enough to meet even five of the 17 Sustainable Development Goals (SDGs), which India has committed to achieve by 2030, finds the same report.

Private funds raised for social sector funding in India grew 15% annually between FY14 and FY18 to reach ₹70,000 crore. This outstripped the growth in public sector funding to the sector, which grew 10% annually to ₹2.10 lakh crore. To be sure, the relatively slower compound annual growth rate in the government’s funding of social sector programmes comes on a much higher base, as compared to the private sector.

The report states that an outlay of ₹26 lakh crore would be needed for India to meet even five of the 17 SDGs by 2030 and even if India sustained the current rate of growth in social sector funding, there will be an annual shortfall ₹4.2 lakh crore.

“A large part of the funding gap is expected to be bridged by public funds; however, private funding is also punching way below its full potential. Indian ultra-rich and corporations need to step up further if it has to meaningfully cover a part of the SDG shortfall,” says Arpan Sheth, partner, Bain & Co.

In the UHNI category, it appears that not too many other wealthy individuals apart from Wipro’s chairman Azim Premji are allocating as much as they potentially can for philanthropic activities. The report finds that 55% of individual philanthropic giving (which works out to around ₹23,650 crore) comes from these UHNIs. And Premji’s contribution accounts for an overwhelming 80% of this figure.

“Take out that contribution across the years and the segment has seen a 4% decrease since 2014. This is a key improvement area, given that UHNI households have grown at a rate of 12% over the past five years and are expected to double in both volume and wealth,” the study says.