Social sector
India's non-profit or third sector — NGOs, NPOs, Section 8 companies and social enterprises working on human development areas like education, health and sanitation, distinct from government and for-profit business.
In plain language
India's non-profit sector goes by several names. The workbook calls it the social sector, or the third sector — separate from government (the first sector) and private business (the second).
It is a big, mixed group. It includes NGOs, NPOs, Section 8 companies, voluntary organisations and social enterprises. The workbook's own definition: the social sector covers "all those sets of activities which contribute to human capital formation and human development such as education, health, medical care, water supply, sanitation, and housing."
India's social sector has old roots. The tradition of voluntary work, called shramdaan, goes back to before Independence. The sector grew fast in the 1970s and 1980s, helped by government agencies and foreign donors. Liberalisation in the 1990s made NGOs important voices for vulnerable people. The Companies Act, 2013 added a fresh push: it made CSR spending compulsory, which gave the sector a new source of funds.
Two goals define most of the sector's work: closing the gaps government services leave behind, and reaching people markets do not serve.
How it works
A cross-sectional 2023 survey (India's Millions Mission Report, 851 NPOs) gives the workbook's clearest numeric snapshot of the sector:
| What it measured | Figure |
|---|---|
| NPOs focused on social services | 70% |
| NPOs focused on education | 59% |
| NPOs focused on employment and community development | 56% |
| Registered after 1990 | 87% |
| Small organisations by annual expenditure | 62% |
| Working with government schools | 75% |
| Working with Panchayats | 69% |
| Reported increased budgets over the last 5 years | 58% |
| Small/mid-size NPOs affected by COVID-19 | 65% |
| Largest state cluster of surveyed NPOs (Maharashtra) | 50% |
Legal variety. The sector has no single regulator. A Trust answers to a state Charity Commissioner. A Society answers to the state Registrar of Societies. A Section 8 company answers to the Registrar of Companies. Each has its own governing Act, its own constitution document and its own minimum-member rule.
Scale, for context. The Central Statistical Institute of India counts at least 33 lakh NPOs in India — about one for every 400 Indians — against the US National Center for Charitable Statistics' count of more than 1.5 million non-profits.
A worked example
Figures below are the workbook's own survey findings, applied to an illustrative organisation.
Sahayog Samiti, a 5-year-old society in rural Maharashtra, runs an after-school education programme and partners with two government schools and the local Panchayat.
On the workbook's 2023 survey benchmarks, Sahayog Samiti looks like a typical Indian NPO: it falls in the 59% of NPOs focused on education, sits in the sector's largest surveyed state cluster (50% in Maharashtra), and, being 5 years old, belongs to the 87% registered after 1990. Because its annual budget is under ₹1 crore, it also falls into the survey's 62% small-organisation category by expenditure.
When the COVID-19 pandemic hit, Sahayog Samiti lost two of its five corporate donors for a year — a small-scale version of the disruption the survey found affected 65% of small and mid-size NPOs. It recovered by widening its individual-donor base, one of the four main funding sources the workbook names for the sector as a whole.
Why NISM asks about it
Chapter 1 (Introduction to Social Sector Ecosystem), section 1.1, defines the social sector and traces its history from shramdaan to the 2013 CSR mandate. Box 1 gives the 2023 cross-sectional survey figures. Expect a question testing the sector's alternate names (social sector, third sector, non-profit sector), its core definition, or a specific Box 1 percentage.
Common exam traps
- "Social sector", "third sector" and "non-profit sector" are the same thing in this workbook — not three separate categories.
- The sector has no single regulator. Trusts, Societies and Section 8 companies each answer to a different authority, under a different Act.
- 33 lakh is India's own NPO count; 1.5 million is the separate US figure the workbook cites for comparison — do not swap them.
- The Box 1 survey is based on 851 NPOs, not the whole sector — treat its percentages as sample findings, not a census.
Check yourself
1.The National Voluntary Guidelines on the Social, Environmental and Economic Responsibilities of Business were issued in 2011 by:
- a)Securities and Exchange Board of India
- b)Reserve Bank of India
- c)Ministry of Corporate Affairs
- d)NITI Aayog
Show the answer
Answer: (c) Ministry of Corporate Affairs
The Ministry of Corporate Affairs issued the NVGs in 2011. They were later revised to align with international standards and the SDGs, and now appear as the National Guidelines on Responsible Business Conduct, with nine principles.
SEBI, RBI and NITI Aayog are all real bodies in the social sector story, but none of them issued these guidelines.
Where this is taught
Free preparation for NISM Series XXIIIRelated terms
- Not for Profit OrganisationA social enterprise that is a charitable trust, charitable society or Section 8 company (or other entity SEBI specifies); it can register on an SSE and raise money mainly through ZCZP instruments.
- Social enterpriseAn organisation, non-profit or for-profit, that exists primarily to create social impact; under SEBI ICDR it is either an NPO or a For Profit Social Enterprise that has established primacy of social intent.
- StakeholderAny group or individual who can affect, or is affected by, an organisation achieving its objectives — beneficiaries, staff, board members, funders, government and the local community.
- SustainabilityMeeting present needs without harming the ability of future generations to meet their own — the Brundtland Commission's 1987 definition, split by the workbook into environmental, social and economic dimensions.
- Starvation cycleThe pattern where donors fund only an NPO's programmes, forcing it to pay rent, salaries and other overheads from its own thin resources, which starves it of the capacity to grow.