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INCLUSIVE GROWTH BY REALIGNING SUPPLY CHAINS- Present Scenario
 

The difference between what we do and what we are capable of doing would suffice to solve most of the world's problems.
~ Mahatma Gandhi

India in the last four years of the Eleventh five year plan has seen a growth rate of 8.7% (avg.), making India one of the fastest growing economies in the world.
 

The industrial sector including other areas has responded well to economic reforms and has shown that it is capable of competing in the global economy. Perceptions about India among global investors are very favourable. These developments suggest that the economy is now at a point where it can achieve sustained economic expansion that has the potential to bring significant improvement in the lives of our people. If this momentum can be accelerated in the years ahead, it will put India on the path to becoming one of the key players in the

world economy over the next two decades.

These positive factors notwithstanding, a major weakness in the economy is that the growth is not perceived as being sufficiently inclusive for many groups. Indicators of deprivation suggest that the proportion of the population deprived of a minimum level of living is much higher. The composition of growth in recent years has also presented some problems, agriculture has grown very slowly, it has widened the rural–urban divide and also contributed to the severe distress in rural areas in some regions. Total employment in the economy has improved in recent years, but the labour force has grown even faster, leading to an increase in the unemployment rate. Also, economic growth across regions has not been balanced.

The delivery of essential social services at the grass roots level is also poor and this is a major causative factor in unequal development. Much higher levels of human development can be achieved even with the given structure of the economy, if realignment or reorientation of delivery system is improved. So, the central vision should be is to build on our strengths to trigger a development process which ensures broad-based improvement in the quality of life of the people. Growth should be better balanced to rapidly create jobs in the industrial and services sectors. Rapid growth in the economy at large, and especially in the employment generating sectors such as medium and small industry and services, needs to be supplemented by targeted livelihood support programmes aimed at increasing productivity and incomes of the poor in several low income occupations.
 

India is currently at a stage of ‘demographic transition’ where population growth is slowing down but the population of young people entering the labour force continues to expand. If the workforce is gainfully employed, a lower dependency ratio means a higher rate of savings which, in turn, can raise the growth rate. This young demographic profile places India favourably in terms of manpower availability and could be a major advantage in an environment where investment is expanding in India and the industrial world is ageing. It is, however, essential to produce a growth process in which employment/gainful engagement, would be available not only for new entrants to the labour force but also in the non-agricultural sector. Rapid growth should focus on labour-intensive industries and small and middle enterprises will create employment opportunities in the manufacturing and services sectors. The vision of inclusiveness must go beyond the traditional objective of poverty alleviation to encompass equality of opportunity, as well as economic and social mobility for all sections of society. There must be equality of opportunity to all with freedom and dignity, and without social or political obstacles. This must be accompanied by an improvement in the opportunities for economic and social advancement. In particular, individuals belonging to disadvantaged groups should be provided special opportunities to develop their skills and participate in the growth process. This outcome can only be ensured if there is a degree of empowerment that creates a true feeling of participation so necessary in a democratic polity. On the contrary, it is a strategy which aims at achieving a particular type of growth process which will meet the objectives of inclusiveness and sustainability.
Private enterprises are well placed to play a much larger role in augmenting natural and social capital. Corporates have created assets and facilities that span the length and breadth of the country, and therefore, constitute the front line of engagement with civil society. The physical presence in communities around their catchments gives them an opportunity to directly engage in synergistic business activities that can create livelihoods and add to preservation of natural capital. More than financial resources, private enterprises possess the more crucial managerial capability to ensure efficient delivery of social projects.
Apart from focusing on their top-lines and bottom-lines, the corporate now can also be seen focusing on inclusive growth. The ministry of corporate affairs has suggested that the corporates should come together and work along with the government in promoting inclusive growth in the country. In the present global scenario, it’s not just the government or the regulators that have a role to play, but even the corporates should come together and play an effective role to contribute in the country’s inclusive growth. The pace of growth of Indian economy with inclusive & sustainable growth in possible to its full potential by the role played by government only but private companies have to play a dynamic & leading role in this regard. This has been also highlighted by our Hon'ble Prime Minister Dr Manmohan Singh in ten-point 'Social Charter' sharing his vision on the responsibility of corporates for sustainable and inclusive growth. He said “In a modern, democratic society, business must realise its wider social responsibility. The time has come for the better-off sections of our society 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, to be role models of probity, moderation and charity. Indian industry must, therefore, rise to the challenge of making our growth processes both efficient and inclusive. If those who are better off do not act in a more socially responsible manner, our growth process may be at risk, our polity may become anarchic and our society may get further divided. I invite corporate India to be a partner in making ours a more humane and just society”.
Today the companies are contributing towards society through their CSR activity. The ministry of corporate affairs and the industry chamber, Confederation of Indian Industry (CII) had recently come out with a study on the Corporate Social Responsibility (CSR) in which the role of private sector in fostering inclusive growth and globalization has been recognised. Almost all major companies in India have a CSR programme. The companies in partnerships with the civil societies have provided funds, skills, infrastructure and technical know-how to various people. CSR initiatives are quantified by the market and provide a direct incentive to the company to enhance socially responsible behaviour. An enlightened consumer, by exercising a choice in favour of 'socially responsible' enterprises, can unleash a powerful force of incentives. A 'positive vote' for socially responsible companies, exercised through preference for a company's products and services, would change the context and dimension of meaningful CSR, create strong economic multipliers and enhance shareholder value. The implications of such consumer franchise for business will be wide ranging. Consumer preference will spur a massive movement in corporate innovation to integrate business goals with the building of societal capital. CSR also emerges as a distinctive market differentiator and helps in positioning progressive companies more strongly in the marketplace. Companies will vie for consumer spend by positioning CSR as a compelling value proposition. Gains would accrue to the company and its shareholders with increasing revenues and goodwill. Where consumers go, Investors will follow. Investors will increasingly find such socially responsible companies attractive, given the larger market gains.

 
 
 

Potential employees would also seek opportunities in such successful companies and the enterprises themselves would be better positioned in the war for talent. Competition amongst CSR exemplars would lead to a perceptible augmentation of natural and social capital and this would create a more sustainable future. Thus, powerful market drivers will emerge to encourage CSR as an integral part of business strategy. In the course of time, stakeholders will build a more enduring relationship with such companies, continuously creating value for the organisation, for its shareholders and the nation. CSR can lead to optimum utilisation of national resources, given that far higher social benefits will accrue to every unit of incremental cost incurred by the organisation. Thus, given the right market incentives, Indian corporate can significantly add to Government efforts in pursuing growth with equity.

Companies procure goods and services form the different sources, if companies can closely look their supply chain and sourcing they can definitely contribute for the inclusive growth of India, along with that they can get advantage of getting quality goods (also services) and saving in their expenditure which lead to improvement in their bottom line. So, this gives new dimension and facets to CSR activities of organizations. The main theme of this paper is to examine how companies by changing, modifying, innovating and realigning their supply chain can help them in contributing towards inclusive growth of country can also get benefited to improve their bottom lines.
 

Click these links to read in details:

Introduction
Inclusivity Measurement
Present Scenario
Supply Chain

Realigning Supply Chain through :

Direct Procurement from Producers/Primary Suppliers
Use of Information & Technology
Vendor Development
Open Tendering
Ancillary Development
Targeted Procurement
Unbundling of Contract

Discussion
 


By
Digvijay Singh, Dy. Manager (Materials Management)
Research & Development Center for Iron & Steel (RDCIS)
Steel Authority of India Ltd. (Ranchi)

 

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