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This paper critically examines the linkage between social capital and effective democracy. Robert D. Putnam, in his study ‘Making Democracy Work: Civic Traditions in Modern Italy’ asserted that a substantial stock of social capital affects the quality of democracy in terms of effective institutional performance. However, a group of critics, such as Carles Boix, Margaret Levi, and Sidney Tarrow, pointed out that Putnam did not delve into the linkage between social capital and effective democracy, and also did not explain the deep-rooted mechanism by which social capital leads to effective democracy. Thus, a research gap exists that needs to be addressed. Throughout this research paper, a mechanism is established that explains how this linkage between social capital and effective democracy works better. Social capital transforms its civic capacity into effective institutional performance by triggering a high level of political engagement in society. A substantial stock of social capital is a force that brings about politically engaged citizenry. Once citizenry is politically engaged, it transforms into power to ensure the quality of democracy. So, the argument is that social capital transforms its civic capacity into the political engagement of citizens, which, in turn, leads to effective institutional performance and makes democracy vibrant. Keywords: Social Capital, Political Engagement, Institutional Performance, Vibrant Democracy, Robert D. Putnam.