Thursday, May 03, 2007

Who can “fix” poverty?

For long, we have been relying on the government to fix the problem of poverty. Then we thought that NGOs will somehow solve the problem. Now we think private companies, through their “corporate social responsibility” (CSR) programs, will significantly reduce poverty.

Many companies in India have formed CSR departments that make donations and involve themselves in initiatives designed to help the poor. But for the most part, the CSR movement appears to be a public relations campaign or a “feel good” effort, and less of any major assistance to the poor. The little that the companies do is somehow tied to publicity and favors to politicians, and often an indirect way to sell their products. Companies have figured out ways to extract government grants for their CSR activities, and hence, minimize their own contributions. Regardless of all these, if even small benefit goes to the poor, it is well and good.

I like to see corporations investing in the rural sector. They must be required to pay wages that allow families to support themselves. They must offer at least minimum benefits for employee healthcare and educational support. They must not damage the environment. If they would do just these – be socially conscious citizens --, it is more than sufficient. Unfortunately, even those companies that have CSR programs do not adhere to these simple principles.

Governments must offer sufficient incentives for companies to invest in the rural and deprived communities by way of soft loans, infrastructure improvements, tax breaks, etc., and keep out of the process except for enforcement of labor laws, worker safety and environmental protection. Market forces will automatically take hold. The trouble is that neither the government nor the companies do their part.

We are under the illusion that poverty can be solved by NGOs and the government. Now we are beginning to think that the CSR movement will. Both NGOs and governments have roles to play, but the real solution is in creating vibrant economic activity. This is the lesson I have learnt from our Baldev Farms and other work in Tamil Nadu.

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Saravanan said...

Dear Sir,
It is really obvious that the poor who live on the money that they earn in a day ,which is almost the pocket money of most college students for a day,must be given a more practical oppurtunity and increased wages ,if one tries to improve their state.
At present ,the government and politicians are more concerned in methods to improve GDPs and FDIs rather in alleviating the poverty of our fellow citizens.

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