Twenty-five years after economic liberalization, the biggest challenge remains th
Twenty-five years after economic liberalization, the biggest challenge remains the correction of inequity in the distribution of the enormous wealth that has been created over this period. With unemployment reducing by less than one percent (from 4.3% in 1991 to 3.6% in 2014), and abject poverty unreduced, the whopping 1,388 per cent (Rs 6,270 in 1991 to Rs 93,293 in 2016) jump in per capita income remains a cruel statistical vanity. As Raghuram Rajan said in a recent interview, we are far from ‘wiping the tear from every eye’ and that ‘reasonable distribution’ of income is a precondition to eradicate extreme poverty.
It is time for businesses that is both the largest beneficiary and the key driver of this enormous wealth creation, and which is pushing the GDP up by 2,216 percent (Nominal GDP at current prices- Rs 5,86,212 crore in 1991 to Rs 1,35,76,086 crore in 2016), to introspect on how it failed to contribute to reducing unemployment significantly as well as distributing gains equitably. Our collective wisdom tells us clearly that 2 percent (mandated Corporate Social Responsibility) is not the answer.
The year 2015-16 saw the state that is tasked with regulation of wealth distribution through its policies and taxation, being caught in a demonetization drive that did not stay the course of its stated intentions. It has, by most measures, dented the growth trajectory, at least in the short term, for both the formal and the informal sector – the latter more severely. The state has also not managed to fulfill its ambition of exponential progress on the ease of doing business index. For the country to stay the growth path and find better ways of redistribution of wealth, businesses will need to think beyond the profit box and partner with the state, the civil society and the communities in finding creative, sustainable solutions.
India Responsible Business Index (IRBI) has been gaining a lot of currency in this collective quest to explore ways of correcting India’s growth story. The Index was originally conceived through a collaborative partnership between Corporate Responsibility Watch (CRW), Oxfam India, Change Alliance, Praxis Institute for Participatory Practices (Praxis) and Partners in Change (PiC). Last year’s report received a lot of attention by media, corporates, academic institutions as well as civil society for bringing the community-business relationship back into focus. The five parameters of this Index, non-discrimination in the workplace, employees’ dignity and human rights, community development, inclusive supply chain and community as business stakeholders continue to remain very significant, especially in the background of a number of policy changes. The success of the Index inspired Praxis, CRW, Oxfam India and PiC to come together again and come out with the second edition.
This year’s report will provide companies with a new set of data and analyses to help evolve policies that are aligned to the National Voluntary Guidelines, and thereby create an enabling ecosystem in which there is a level playing field in community-corporate negotiations. This will help eliminate crony capitalism and create better ways of distributing the benefits of growth propelled by the business sector.
Tom Thomas, Convenor – Corporate Responsibility Watch