Irreversible rise of non-profit activity

Livemint     26th August 2020     Save    

Context: The non-profit sector deserves attention as its role in the economy looks set to grow dramatically.

Growth of Non-Profits in India: 

  • Rising number of non-profits: Because of a huge unmet demand for public goods and services. 
  • More than 3 million registered NGOs: One NGO for every 400 citizens
  • Purpose of NGOs:
    • Achieve goals such as preventing pollution, saving wildlife, etc.
      • E.g. closure of a Sterlite plant in Tamil Nadu 
    • Some engaged in activities like Money laundering 

Some realities of the economy : 

  • Human skills trumped by machines: Hence, jobs depend on making human skills compatible with machines 
  • High demand for super-skills and learnable skills: the main reason for the jobs crisis.
    • Abundant resources for human survival available: Their distribution is the problem
  • Output of goods and services moving into the non-monetizable part of the economy, Hence disappear from GDP
    • E.g. Media sector 
  • The above facts hint towards a new global economy polarized between:
    • A market economy that produces goods and services efficiently, and
    • A non-market economy distributes goods and services, almost like NGOs 
  • The market economy may increasingly depend on non-profits. Hence, non-profits will be quite crucial 

Evidence of rising significance of Non-Profits: 

  •  Employment guarantee schemes
  •  Income-distribution schemes unrelated to work
  •  Cash payouts
    • E.g. Universal Basic Income, Jan Dhan Yojna
  • Loan write-offs and waivers
  • Corporate Social Responsibility  

Way forward:

  • Governments need to make the non-profit sector more efficient and vibrant
  • Non-profits deserve deregulation as the mainstream corporate sector
  • Enlightened leadership and greater professionalization in this sector 

Conclusion: The non-profit sector plays a huge role in the economy. We should make them more responsible and productive, and less obstructive.