This blog originally appeared on FSG’s Shared Value Blog.
Incredible India – so goes the catchphrase of one of the most successful Indian tourism campaigns. Having had the opportunity to work in India and travel around the country myself, I can only agree with the slogan. But India is not only incredible; it is also transforming (incredibly) fast.
In political terms, India is establishing itself as a heavyweight – witness its increasing influence in multilateral forums such as the G20, the Doha Round or Climate Change negotiations. But perhaps even more noticeable is its economic growth.
Second only to China among large economies, India has grown at an average of over 8 percent in the last five years, and has lifted millions of its citizens out of poverty in the process. It has attracted billions of dollars in foreign direct investment (FDI), and is home to some of the world’s most dynamic firms. And with both young demographics as well as a growing middle class, the country has the necessary ingredients for continued growth.
But as the saying goes, all that glitters is not gold. In spite of strong economic growth, India is confronted with huge challenges. It has one of the world’s highest malnutrition and maternal mortality rates (MMR). And while economic growth rates may have been high, it is hard to argue that the entire population has benefited.
According to a UN study published last year, more of the world’s poor still live in India than in all of sub-Saharan Africa. The headline-grabbing Buddh Circuit, a Formula One race track in Noida in Uttar Pradesh, exemplifies the stark contrast between the wealthy and poor in India: High-speed racing cars zooming in circles on freshly paved tarmac on the inside, widespread poverty and lack of proper roads on the outside.
Unsurprisingly, the distribution of the benefits of growth across different segments of society has been questioned and is a topic of national debate. Inclusive growth, the idea that economic prosperity should benefit all populations, was made an explicit goal in the 11th Five Year Plan and is likely to be the central component of the upcoming 12th Five Year Plan as well. But while the need for inclusive growth is evident if India is to continue down the road of prosperity, the means of achieving it are less clear.
FSG’s publication on creating ‘Shared Value’ in India sheds light on this question. While recognising that both the Government of India and philanthropists have critical roles to play, we believe the private sector possesses the necessary knowhow, technology and resources to address social issues at a large scale.
Creating Shared Value (CSV) holds that firms can create competitive advantages and long-term business value by tackling social problems head-on. Our India study highlights 12 powerful examples of companies that are currently creating shared value in the areas of health and sanitation, agriculture, and financial services.
And in the financial services sector, companies such as Eko Indian Financial Services and IFMR Rural Finance are bringing financial services to the unbanked through innovative products that do not require savings accounts.
The case studies demonstrate the vast business opportunities that are inherent in addressing social issues, and that are there for the taking for those companies that think innovatively about re-conceiving products and markets, redefining value chains, and enabling local cluster development.
Our hope is that this paper will inspire more Indian companies to jump on the CSV bandwagon, and ultimately help steer India’s fast-paced transformation in the direction of inclusive growth.
By Simon Meier, FSG Consultant
Simon is a consultant with FSG’s Geneva office with global experience in both the non-profit and for profit sectors.