SEPTEMBER-OCTOBER 2007 Edition

 

 

VILLAGERS angered by a South Korean steel company's plan to build a $11 billion plant in eastern India kidnap two company executives before releasing them unharmed and this latest episode in a saga of continuing delays in land acquisition jeopardizes the future of this investment. In West Bengal, intense opposition continues to the establishment of a car factory to build a $2,500 "people's car" resulting in pitched battles with the police leaving scores injured. Just a few months ago, another violent clash between police and villagers protesting the creation of a special economic zone left 14 dead, putting into doubt the future of SEZs. Harnessing the anger of the rural poor, Maoist insurgents roam freely across half of India's states causing Prime Minister Manmohan Singh to call them the single largest threat to our country. What may be common across these episodes is the rising anger of people who are mute spectators to the Indian economic miracle. The rise of the Indian economy is one of the most impressive and important geopolitical events in the world today, and is being counted on by investors, governments and people around the world. As we celebrate the 60th anniversary of our independence, in many ways our prospects have never been brighter. Yet, worryingly, our new prosperity has accentuated the alreadystark contrasts in wealth and human development and we may be reaching the point where unless there are more beneficiaries, democracy may not let growth continue.

Business leaders like me for the most part tend to believe that growth will cure most sins and that our responsibility stops at creating competitive enterprises and paying taxes. Eradicating poverty is the government's job, not ours. Right? Wrong. The consequences of abdicating this issue will be grave. There are already signs of growing lawlessness as disaffected young people turn to crime, insurgency and terrorism. But even more ominously, inequity inevitably generates a political response that can thwart the ambitions of the affluent. Last year, political parties, vying to tap the discontent created by inequity, enacted legislation reserving half the seats in India's educational institutions for lowercaste students. This policy, and the controversy surrounding the creation of special economic zones, should serve as an early warning of what majorities can lawfully do when we elites ignore them. Furthermore, unless we educate hundreds of millions of people at the bottom of the pyramid and create jobs for them, we will starve our businesses of the skilled talent and the consuming middle class we need to buy our products and keep growing. So reducing poverty and inequity is very much in our self-interest.

However, even when business leaders agree that poverty is our problem, the approach is often confused. Two methods in particular have dominated recent thinking on the subject, and, in my view, both are well-intentioned but futile against so vast a problem. Lifting hundreds of millions of people out of poverty cannot happen through"corporate social responsibility." Important as these initiatives are, they are neither sustainable nor scalable, and therefore achieve limited impact. Nor will poverty be overcome through the "bottom of the pyramid" initiatives that seek to make the poor into bigger consumers of shampoos and televisions by enabling them to pay per use. We need a new approach driven by innovation and entrepreneurship. We need to focus less on doing small, nice deeds for the poor, and less on selling them affordable versions of what rich people consume. Instead, we must marshal the best minds and the resources of big, innovative companies to think freshly about the shackles that keep people poor and invent solutions that break these shackles. The poor don’t need our charity; they need us to innovate them out of their morass. India is filled with efforts of this kind. For instance, the biggest hope for the next agricultural productivity revolution in India lies in the rural business initiatives of companies like Reliance Industries, telecom operator Bharti Airtel and ITC, which are investing billions of dollars to create an efficient agricultural supply chain bypassing scores of middlemen.

Look, too, to the rural banking initiatives of companies like SBI and ICICI that will deliver affordable credit and insurance to half a billion people, helping them finally break a historic cycle of poverty. Doing good is also good business: Scalable business models that help the poor access markets, or deliver essential services like education, healthcare or drinking water, represent huge economic opportunities waiting to be tapped. For example, at my company, Microsoft India, engineers are working on problems like how to use the Web to deliver services to rural entrepreneurs, or how to help tiny businesses access global markets. Seeing the pressing challenges of our educational system, we are thinking hard about how information technology can be applied to learning and skilling. Through an initiative called Shiksha, we've learned how to effectively and inexpensively deliver computer literacy to school teachers and children – nearly four million so far. We're now trying to put a business model behind this so that the programme can be scaled. Recognising that English is a passport to jobs, we are working with partners to evolve new ways for people to learn English using a computer. Microsoft is not doing this for charity. Working collaboratively with governments, business partners and NGOs, we are applying innovation and resources to solving some tough societal problems in the process sowing the seeds for tomorrow's growth. If we get it right, the poor will be happy to pay to get jobs they otherwise wouldn't have and we will have expanded the potential base of users for our software to 500 million from 100 million. It is quite conceivable too that the next big innovation could come from immersion in the problems of India's poor.

India today stands at a tipping point. We have the opportunity to eliminate poverty and become a developed nation in the next fewdecades. We have the responsibility to ensure that a stable secular democracy anchors a very troubled South Asian neighbourhood.We have the opportunity to evolve a new model of capitalism – one with a human face. The key here is to apply the same intense focus, creativity and innovation we have applied to our businesses to solve some of the pressing problems of our society. Doing good has never been more rewarding!

Ravi Venkatesan is Chairman of Microsoft India.

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