Traditional growth models are the legacy of the industrialization era that started a couple of centuries ago. The approach meant leveraging lowest cost resources with an aim of maximizing benefits to the owners of the enterprise. It is apparent now that pursuing a growth model that brings prosperity to a few while leaving the majority out of the ambit of its benefits is only furthering the gap between the haves and have not. There is a need to change that for inclusive growth, and the 'Anand experience' provides an excellent model.
Verghese Kurien, the father of the 'white revolution' in India, innovated the concept of social business in this country through the 'Anand Model', a vertically integrated three-tier self-generative system for cooperative dairy development. He successfully established a commodity like milk as an instrument for socio-economic development. The impact that Anand Model was able to make is very similar to the economic theory canvassed by economist Jeffrey Sachs three decades later.
Sachs, professor of Sustainable Development at Columbia's School of International and Public Affairs, authored a seminal work "The End of Poverty" in 2005 in which he claimed the right policies and key interventions can eradicate extreme poverty (living on less than $1 per day) in 20 years. He suggests that an improved input significantly increases the income of subsistence farmers, thereby reducing poverty. He does not believe that increased aid is the only solution; he supports establishing credit and micro loan programmes that are lacking in impoverished areas.
Across the globe there is a realization that consistent economic growth has done precious little to reduce the actual extent of deprivation in the world. World Development Report 2008 mentions 850 million people as undernourished and chronically food insecure; leading to death of 2.8 million children and three million women annually in the developing world. The recent financial meltdown too has added about 200 million to the list of poor globally.
These facts highlight the need for a greater inclusiveness in the determination of growth processes to combat the increasing global poverty levels. No wonder that global leaders are refocusing their efforts to create a participatory base, encompassing every section of the society in the growth process. Inclusive growth implies an equitable distribution of resources and its accruing benefits for every section of the society.
Muhammad Yunus, the Nobel laureate from Bangladesh, purported the need for business models that recognize the multidimensional nature of human beings; 'Social Business' as he terms it provides everyone with a fair chance to unleash their energy and creativity. Designed to operate as a normal business enterprise with the exception of the principal of profit maximization, which is replaced with the principal of social benefit, he set about to make a change. He believes once a social objective driven project overcomes the gravitation of financial dependency, it is ready for space flight.
The success of an inclusive growth model in a developing economy will depend much on growth in the rural areas, especially in the agriculture sector. If you look at the agricultural sector in India, the conventional output in relation to the human resources deployed is actually reducing dramatically. In large parts the ailment to this section of our society can be addressed by enabling micro enterprises and businesses that create value added products and services. It is important to provision necessary inputs to the marginalized populace in the rural areas such as access to banking, micro credit and suitable technologies.
The Indian government had consistently provided policy support to agriculture and its sub-sectors, including recently while formulating the eleventh plan. Poor execution of public delivery models have seriously impaired the impact that these policies could have made. The Indian farmer seeks empowerment, access to right inputs and not merely largesse. If inclusive growth in India is to succeed there is a dire need to revisit the operating models at the lowest levels.
The classical intervention for inclusive growth has come through NGOs or through the corporate world itself. While the NGOs have been stymied by unavailability of adequate infrastructure the corporate intervention through Corporate Social Responsibility (CSR) is usually limited to its area of operation or in conflict with the overall goal of the business to maximize profit.
There is a case to consider the Anand Model as an operating national model due to its proven record. The approach provides for action at the grassroot levels as well as coalesces the inputs into capacities to provide global scale finished products, effectively providing an opportunity to create economic value at all the three levels of value chain.
However the Anand Model too has its limitations, those that have impaired its ability to emerge as an instrument of change across the nation. These are largely structural as well as political. The cooperative framework imposes limitations as it necessitates these entities to be administered by bureaucracy and state controlled archaic act and rules that impairs functional autonomy. Given its potential impact the guiding structure for the cooperatives shall need to be reviewed and structured to allow them to play the role of catalysts of inclusive growth.
Technology is driving mass awareness and exposing systemic inefficacy and socio-economic inequalities, in turn influencing public opinion. India today has a wonderful opportunity to lead the world in inclusive growth. Better infrastructure in conjunction with an inclusive growth enabled by all-pervasive technology has the potential to transform the lives of a billion people. But we need to act decisively and now. Napoleon Bonaparte had said, at a critical juncture: "Take time to deliberate but when the time for action arrives stop thinking and go for it; otherwise defeat is inevitable."
(The author is former executive director, National Dairy Development Board and past president Indian Dairy Association, who works for rural empowerment. He can be reached at firstname.lastname@example.org)