Friday, April 16, 2010

The most important issue for Business Leaders in India today...Look at the 'Not-So-Shining' India

The core issue in any Developing or Undeveloped nation is sustainable and inclusive development. The same is the case with India today. With a population of 1.2 Billion individuals, and an economy which is growing at an annual rate of 8% and more, we have set the stage for a very prosperous India in the coming decades. However, something that has been missing has been the equality of this growth across all sections of the society. There are suddenly 2 very different Indias today; a prosperous one with 400 middle class people and a very poor one with 400 million who do not have the access to most goods and services. The latter is the India that needs to be targeted by the business leaders of the country today.

It is not as if this is something radical that is being proposed. Progressive leaders have looked at this population and made profitable models to target them. We have awe inspiring organizations like ITC which has started its ‘E-Choupal’ initiative for farmer’s supply chain management, Unilever which has a ‘Shakti Amma’ concept of selling products in rural areas and hospitals like Aravind Eye & Narayana Hrudayalaya which provide healthcare to all sections of the society at a fraction of the cost. These ventures have to be seen not as CSR projects but as viable business projects which bring value to both the organization and the people of India.

Concepts like the bottom of the pyramid have a place in economics. The target for all entities, be it the government or the industries, should be all levels of this pyramid. Obviously, there might be some inconsistency in the targeting but no one should be forgotten completely. Theories which were popular earlier like the trickledown effect which talked about the money flowing from the top to the bottom of the pyramid will have to be discarded or heavily modified. Else, the economic inequalities will keep becoming larger with rich becoming richer and poor becoming poorer.

Business leaders need to remember that we are a huge market that had largely been untapped till 1991 when the reforms process was initiated by the government under the World Bank guidance. The challenge is in getting the right product and at the right price to a person which makes a person’s life better in even a small way. Since such poor households are mostly in rural areas, it also helps in creating employment opportunities there and helps communities better their livelihoods, creating a cycle of positive change where rising incomes and livelihoods demand better products and hence better profits.

This is a huge opportunity for progressive business leaders and organizations today which if tapped into can lead to huge value creation for all stakeholders.

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