Inclusive business models: Linking poor producers to modern markets

Abstract

Even with all the brouhaha about “India Shining”, our country is still languishing at rank 134 in terms of Human Development Index. India’ dramatic economic growth since 1991 demonstrates an economic inequity in as much as the poorest people have been marginalized and excluded from the growth. They have become poorer not only relatively but also in absolute terms. A World Bank paper by Martin Ravallion and Shaohua Chen in 2005 states that as on 2005, the percentage of people in India living below $1.25 a day fell had come down to 42% from 60% in 1981. However, the corresponding number of people had increased from 421 million in 1981 to 456 million in 2005. This means that while the country as a whole has progressed, the marginalized have continued to be marginalized further. This is where the need (and scope) for Inclusive Business Models arises. The poor possess a potential for consumption, production, innovation and even entrepreneurial activity that is largely untapped. Inclusive businesses are for profit businesses that involve the poor on the supply side as employees, producers and business owners and preferably also on the demand side as clients and customers. As such they provide significant opportunities both in terms of profit generation & business growth and also in terms of human development.