Making Development a Good Business

Ashok Khosla

Our country’s economy has made enormous strides over the past couple of decades. Many of our fellow citizens live longer, healthier and more productive lives than ever before. Perhaps as many as 250 million Indians – a population comparable to that of North America or Western Europe – are now active participants in the global economy, having access to the benefits of modern science, technology and the world’s production systems

Yet, more than 500 million of our fellow citizens exist more or less outside the "mainstream" economy, hovering perpetually in a state of stark survival or, at best, of basic subsistence. The incomes and amenities of half a billion or more people in the country need to be raised substantially if citizenship is to mean more than simply the right to vote in elections and national pride is to be based merely on the existence of a handful of extremely wealthy people.

Unfortunately, with the present economic model, it will be a long time before this happens. Passive reliance on a hoped-for "trickle-down" has never by itself been sufficient to reverse the process – the ceiling of the income distribution usually rises much faster than the floor. Economies that have succeeded in raising the floor as well have done so by introducing strong measures to ensure a more equitable distribution of the benefits of socio-economic development. They have done this not through handouts and charity but by enabling the creation of widespread opportunities for livelihoods and jobs at all levels and nurturing these by providing the necessary infrastructure, capacity building and support systems.

If globalization is to benefit the poor, it can only do so where national policies are designed to redirect its forces from mass production purely for export to include also "production by the masses for the masses". Only thus can the goods and services needed by the poor be produced, and the purchasing power to access these be created.

The eradication of poverty needs very different approaches from those we are following at present. First, of course, it needs some deep structural changes in society: grass roots democracy, land reform, access to livelihood resources and fulfillment of everyone’s right to reasonable education and health care.

To do this, technology and the marketplace must be transformed to serve the cause of what Mahatma Gandhi called antyodaya – "putting the last first." This means that primary task of those concerned with sustainable development – public agencies, civil society and others – is to get together and create the conditions which generate the jobs and livelihoods that will enable the mass of people to stand on their feet, socially and financially.

Creating livelihoods and jobs is not the job of government. Despite its inexorable growth to the 20 million employees and 15,000 crore yearly pension bills it has at present, the real role of governments is to govern: to set policies and to facilitate the orderly performance of the other sectors – whose job it is to create jobs and deliver services. Jobs in India, as in all other economies, are actually created by the small and medium (SME) sector, by the "informal" sector and – most of all — by the mini and micro enterprises that dot the countryside. Since rising productivity in agriculture means that the bulk of the 15 million livelihoods and jobs we need to put in place each year will have to be off-farm, it is these sectors that will have to take responsibility for getting our country to work.

Mini enterprises, with five to fifty employees, and capital investments of several lakhs, are capable of using technology and marketing methods to reach beyond the needs of the local community and generate surpluses that enable them to grow and invest in further growth.

To be successful, micro and mini enterprises need a variety of support systems. These supports can best be provided by "social enterprises", a new form of institution in the voluntary sector that works in good business principles. q

 

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