Poverty Alleviation By 2020 Chaitanya GS

Introduction:

Poverty can be defined as a situation only when sections of people are unable to satisfy the basic needs of life. If the person is unable to get that minimum level of calories (2400 calories in rural areas & 2100 calories in urban areas) is considered as being below poverty line.

Rural Poverty in India Around 60% of the Country’s population resides in the villages. According to the statistics, there is higher concentration of poverty in the rural India. This is due to various reasons such as:

1. Alarming population Growth
2. Lack of Investment
3. Lower Literacy Rate
4. Regional inequalities
5. Failure Of Public Distribution System

1. Improper Training.
2. Growing population.
3. Slower job Growth.
4. Failure Of Public Distribution System.

As said by the Prime Minister “In a modern, democratic society, business must realize its wider social responsibility. The time has come for the better off sections of our society - not just in organized industry but in all walks of life - to understand the need to make our growth process more inclusive; to eschew conspicuous consumption; to save more and waste less; to care for those who are less privileged and less well off; to be role models of probity, moderation and charity.” Therefore, to ensure social security in a globalized era, the Corporates have a much bigger role to play.

Corporate Social Responsibility (CSR)
Corporate Social Responsibility (CSR) has become a major focus of interest not only for corporate managers but also for development practitioners, both within the NGO community and within the multilateral and bilateral development agencies. Corporate social responsibility should not just be confined to due payment of taxes alone. Rather, the community and the regions in which a corporate entity functions must be taken into consideration. Mahatma Gandhi called it “Trusteeship”. It is based on the idea that the wealthy have an obligation to society and balance in nature. Their responsibilities, commensurate with their rights.

Foreign Direct Investment (FDI) and Poverty
Although poverty reduction has not been an explicit element of CSR, this does not necessarily mean that the adoption of socially responsible business practices has no impact on poverty in developing countries. In order to address this question more directly, it is necessary first to consider the ways in which business and particularly FDI can contribute to poverty reduction. Given the increased significance of FDI as a source of capital for developing countries in recent years, and the emphasis of development agencies on poverty reduction as a prominent goal, it is surprising that research on the impact of FDI on poverty is so limited.

FDI and Growth
The paucity of research on FDI and poverty in part reflects the fact that many consider the major potential contribution of FDI to poverty reduction to be through its impact on growth. There is an extensive literature on the impact of FDI on growth. While some authors find a positive relationship, others point to the fact that this depends critically on local capabilities to absorb FDI and on the local policy framework, suggesting the need for caution in drawing any direct causal relationship. Nevertheless, if FDI does lead to higher growth, and if this is not offset by increased income inequality, then increased FDI will lift some people out of poverty. However, this tells us very little about the actual mechanisms linking FDI to poverty reduction. A few recent studies have attempted to identify different ways in which FDI (or business more generally) can affect poverty. Unfortunately, none has developed a systematic framework for analyzing the poverty impacts of FDI. A useful systematic approach for addressing such mechanisms can be developed from the framework used by Alan Winters to analyze the impact of trade liberalization on poverty. He identifies three channels:

• The Enterprise Channel;
  This can involve both a direct effect on those employed by the foreign firm and an indirect effect through creating demand for local suppliers. If the increased demand is for unskilled labour, then it is possible that the newly employed will be from among the poor.
• The Distribution Channel;
  Whereas the first channel focuses on the poor as producers, the distribution channel involves the poor as consumers. It has also been suggested that this is a basis on which to develop a business case for firms’ engaging in the elimination of poverty. The Indian TNC Tata, which has a high CSR profile in India, argues that if markets are to grow, the poor must become consumers too. This approach has been popularized recently in the management literature by C. K. Prahalad’s arguments concerning ‘The fortune at the bottom of the pyramid’. He argues that, ‘By stimulating commerce and development at the bottom of the economic pyramid, MNCs could radically improve the lives of billions of people and help bring into being a more stable, less dangerous world.’ He emphasizes the immense untapped potential market represented by the world’s poor, and illustrates his arguments with case studies of successful attempts to develop this market. However, although he provides inspiring examples of success stories in India and other countries, several of the cases, which he cites, are of not-for-profit organizations and relatively few are foreign investors.
• The Government Revenue Channel.
  The final channel identified by Winters involves revenues accruing to developing country governments. Foreign investors, particularly in the extractive industries, contribute to government tax revenues, which may in turn be used for antipoverty measures. The efficacy of this channel depends on the extent to which the state is able to levy taxes on foreign capital and the uses, which are made of any tax revenues.

Conclusion
The innate potential of the poor to innovate and create enterprise needs to be unleashed. Companies should actively provide products and services, which meet real needs affordably and profitably. This is not about community investment programmes. With the best will in the world, global poverty will not be solved by corporate philanthropy. It is about offering choices to the poor, building self-esteem and creating a positive upward-spiral effect.