Context: Social capital in today’s world has emerged as a transformative force. The jobs situation, economic disparities and environmental degradation necessitate a re-evaluation of traditional business models.
About social capital
- It refers to the connections among individuals' social networks and the norms of reciprocity and trustworthiness that arise from them. It is closely related to civic virtue but emphasizes the importance of social networks in making these virtues effective.
- It is often described as the "glue" that holds society together, consisting of trust, mutual understanding, shared values, and behaviours that enable cooperative actions.
- It allows a group of people to work together effectively to achieve a common purpose or goal.
- These rely on voluntary action and may require external funding for expansion.
- In India, social capital is evident in various community-driven initiatives and traditional practices.
- Self-help groups (SHGs), especially among rural women, foster economic empowerment and collective bargaining.
- The Panchayat system strengthens local governance by promoting participation and accountability. It is considered a vital component in development theory. It helps explain why certain economic policies fail when social factors are not taken into account.
- Handicraft-oriented cottage industries rely heavily on strong community bonds, trust, and collaboration among artisans, where skills are passed down through generations, strengthening intra-community ties.
- India has a rich tradition of social capital, with collective social entrepreneurship evident since ancient times. The Maurya and Gupta empires saw the emergence of community organizations like Sabhas and Village Councils. These organizations played a significant role in fostering social and cultural nationalism.
- It plays a crucial role in promoting inclusive growth, particularly by involving the poor and marginalized in development processes.
- It broadens government accountability, encourages compromise, and fosters innovation in policy making. It also enhances the efficiency of public service delivery through the involvement of community groups like Self-Help Groups (SHGs).
Roles of social capital organizations
- Service role: Non-profit organizations often lead the way in responding to public needs, functioning as a flexible mechanism to address critical problems.
- Value guardian role: These organizations act as value guardians in society, promoting individual initiative for the public good and fostering pluralism, diversity, and freedom.
- Advocacy/social safety-valve role: They mobilize public attention to societal problems and represent under-represented groups, thus preserving democracy.
- Community building role: Nonprofits create and sustain social cohesion through bonds of trust and reciprocity, essential for the functioning of a democratic society and a market economy.
Recommendations for strengthening social capital
- The 2nd ARC report suggests drafting a model law for Societies and Trusts, with changes to enhance independence, transparency, and dynamism in these institutions.
- There is a call for an independent accreditation agency for the voluntary sector and for exemptions in foreign contribution regulations for smaller organizations.
- The expansion of the SHG movement is recommended, particularly in financially underserved areas, with support from institutions like NABARD.