India’s social sector funding: A growing gap and a call to action

Fund flow into India’s social sector fell short of government think tank NITI Aayog’s recommendation for 2023-24 by about ₹14 trillion ($170 billion), according to a report by consulting firm Bain and Co. and philanthropy fund Dasra.

While this was chiefly because of lower contributions from the private sector, public sector contributions helped boost funding into India’s social sector by 13% over five years—to ₹25 trillion ($300 billion) in 2023-24, according to the report.

NITI Aayog recommends social sector funding to be 13% of GDP. For 2023-24, that would have been about ₹38 trillion, or 13% of India’s nominal GDP of ₹295.36 trillion that year.

The report said that to bridge this gap, India’s wealthy individuals need to increase their contributions to social sector funding through philanthropy and corporate social responsibility, or CSR, activities.

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In 2023-24, the private sector’s contribution to the social sector was about ₹1.31 trillion ($16 billion). Despite that being a 7% increase from the prior financial year, the private sector’s contribution is far behind the public sector’s contribution, which at ₹23 trillion ($280 billion) accounted for 95% of India’s social sector funding.

The public sector’s contribution to India’s social sector is expected to grow to ₹43 trillion ($525 billion) by 2028-29, according to the Bain-Dasra report.

The public sector’s contribution to India’s social sector accounted for 7.9% of the country’s gross domestic product (GDP) in 2023-24, up from 6.8% in 2018-19. Healthcare was the fastest-growing segment because of higher post-covid allocations, according to the report. Spending on education is expected to grow moderately.

A call to the wealthy

The Bain-Dasra report expects private sector funding to increase 10-12% annually over the next five years, driven by affluent individuals and families. “Indian families are an integral part of the Indian economy, contributing approximately 40% to private philanthropy,” it added.

The report’s data also indicated that many wealthy families are directing their philanthropic efforts towards specific social causes. 

About 40% of funding initiatives are focused on gender equality, diversity, and inclusion, while 29% support climate action projects. 

Family-run businesses also play a major role in corporate social responsibility contributions, channelling over ₹18,000 crore, representing more than 60% of total CSR funding, per the latest available data.

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The Bain-Dasra report also pointed out that affluent families prefer to formalize their philanthropic activities. Around 65% of them employ dedicated staff to manage their charitable portfolios, which is expected to broaden the scope of their initiatives, improve transparency, and contribute to sustained social impact.

The report projected that by March 2029 these families could contribute ₹70,000-75,000 crore to philanthropic causes, adding that this could increase 1.5-1.7 times over five years.

“Family givers’  patient, risk-tolerant philanthropic capital fuels innovation that will empower nonprofits, scale impact, and position India as a global leader in achieving SDGs in line with the vision of Viksit Bharat by 2047,” the report concluded.