Public charitable trusts have the potential to make India’s development more inclusive as they relate to certain vital public issues. Comment.
Approach · directive: “comment”
What it asks · Assess how public charitable trusts can make development more inclusive through work on health, education, relief and similar public issues — and the limits and regulation needed.
It asks 2 things — answer each
- Comment: how public charitable trusts, working on vital public issues such as health, education and relief, can make development more inclusive, with examples
- Qualify: the limits and misuse risks, and the reforms that make their potential real
Open with · 'Charities and charitable institutions' sit in Entry 28 of the Concurrent List; public trusts registered under State laws such as the Bombay Public Trusts Act, 1950 turn private wealth into public goods.
Cover
- Reach: trusts serve tribal health, remote schools and disaster relief where state capacity is thin.
- Examples: Tata Trusts in cancer care; the Azim Premji Foundation in government school education.
- Innovation and social capital: patient funding pilots models the State can scale; trusts mobilise volunteers and voice for marginalised groups.
- Leverage: the Companies Act's CSR rule (at least 2% of average net profits) widens the funds trusts can work with.
- Limits: concentration in richer regions, misuse for tax avoidance, opaque accounts and uneven State-level regulation by Charity Commissioners.
- Way forward: a model law for trusts (2nd ARC, 9th Report), Social Stock Exchange listing with ZCZP instruments, outcome reporting and partnerships with government.
Close with · Social capital is, in the 2nd ARC's phrase, 'a shared destiny'; transparent trusts can carry development to the excluded while complementing, not replacing, the State.
Add value (verified)
- Charities are a Concurrent List subject: Entry 28 of List III covers charities, charitable institutions and endowments.The Constitution of India (as on 1 May 2024), Seventh Schedule, List III - Legislative Department ↗“28. Charities and charitable institutions, charitable and religious endowments and religious institutions.”
- Public trusts gain legal personality by registration before the Charity Commissioner under State laws such as the Bombay Public Trusts Act, 1950.2nd ARC, 9th Report: Social Capital - A Shared Destiny (web.archive.org copy; the live official page did not load) ↗“By way of formal registration before the Charity Commissioner / Inspector General of Registration under the respective State Public Trusts Act e.g. the Bombay Public Trusts Act,1950”
- The 2nd ARC's 9th Report suggested a model law on societies and trusts for States to enact.2nd ARC, 9th Report: Social Capital - A Shared Destiny (web.archive.org copy; the live official page did not load) ↗“Chapter 3 of this Report deals with issues concerning Societies and Trusts. The Commission has suggested drafting of a model law which could be enacted by the State Governments with minor modifications.”
- Not-for-profit organisations registered on a Social Stock Exchange can raise funds through Zero Coupon Zero Principal instruments.Frequently Asked Questions on Social Stock Exchange - NSE ↗“after registering with Social Stock Exchange may raise funds on Social Stock Exchange through i. Issuance of Zero Coupon Zero Principal Instruments”
- Section 135 of the Companies Act, 2013 requires qualifying companies to spend at least 2% of average net profits on CSR.Statutory provisions of CSR (Section 135, Companies Act 2013) - CSR Portal, Government of Odisha ↗“shall ensure that the company spends, in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years”
Question: UPSC's CS (Main) 2024, GS Paper II — paper ↗. Approach: Minimalist IAS, checked 3 Oct 2026 (how we verify) — UPSC publishes no model answers. ·
Model answer· 223words · Minimalist IAS
Charities and charitable institutions sit in Entry 28 of the Concurrent List. Public trusts under State laws such as the Bombay Public Trusts Act, 1950 turn private wealth into public goods, reaching those the State misses.
How charitable trusts make development inclusive
- Last-mile reach: tribal health, remote schools and disaster relief, where state capacity is thin.
- Health and education: Tata Trusts in cancer care; the Azim Premji Foundation in government school education.
- Innovation and social capital: patient funding pilots models the State later scales, and mobilises volunteers for the marginalised.
- CSR leverage: firms must spend at least 2% of average net profits on CSR, enlarging the funds trusts can use.
Trusts for inclusion: Health; Education; Relief; Livelihoods; Environment
Limits to the potential
- Uneven spread: funds cluster in richer states and cities, not where need is greatest.
- Misuse: tax avoidance, laundering and opaque trustee governance.
- Patchy regulation: trust laws differ by State; Charity Commissioners supervise in Maharashtra and Gujarat, and FCRA governs foreign funds.
Way forward
- Model law: the 2nd ARC's 9th Report suggested a model law on societies and trusts for States.
- Social Stock Exchange: registered non-profits can raise funds through Zero Coupon Zero Principal instruments.
- Outcome reporting and partnerships with government.
The 2nd ARC called social capital 'a shared destiny'; accountable trusts can widen inclusion, complementing the State rather than replacing it.
Prepared by Minimalist IAS to the answer standard of Shivam Singh (mentor, 7 years) · facts checked against official sources (how we verify) · updated 3 Oct 2026. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.
