Innovation Holds the Key to Successful Poverty Alleviation in India

Our problems cannot be solved by following the status quo alone – new approaches are needed.

India’s economy continues its rapid growth at a dizzying rate of 7-8% annually. It is on pace to become the third largest economy in the world and the recent acquisition of Flipkart by Walmart validates the country’s growing technology and start-up potential.

Despite its bright future, India still faces enormous challenges in alleviating poverty and improving the quality of life. Consider that 360 million Indians still live below the poverty line of Rs 123 per day; 63 million Indians do not have access to clean water; and in 2017, India had the largest increase in greenhouse gas emissions of any country in the world – leading to 4,000 Delhi schools being closed in November 2017.

Indians are used to seeing these large numbers and, often correctly, shrug their shoulders at their personal ability to make a dent in any of these problems. They are willing to pay higher taxes or even donate to NGOs addressing these problems, but they don’t think it will make a difference.

But there is evidence to the contrary. Through a combination of innovations, philanthropy projects, NGO programmes, government policies and private investment, we are seeing transformational strides in many areas of development occurring in less than one generation, or 25 years.

– The UK has dropped its greenhouse gas emissions by 6.4% in 2017 and continues to invest in sustainability to reduce that number further. The US has dropped 2% during the same time frame with a much larger economy. India’s greenhouse gas emissions actually grew by 4.7% according to the Netherlands Environmental Agency.

– In India, at least one daily nutritious meal will be available to all government school children in the next decade through the replication of midday meal programmes mandated by the government and pioneered by groups like Nandi and Akshaya Patra.

– Worldwide, microfinance has made capital readily available to women and rural small businesses. Created by SEWA, Basix and Grameen Bank in the 1970s, this form of debt is now available through major banks around the world to three billion people previously kept outside the formal banking system.

There are other examples of innovations in agriculture, education, financing, business model and advocacy that are transforming India – from the adoption of drip irrigation and high-yield seeds to the use of artificial intelligence for education.

For over two decades now, technology innovations have been transforming and disrupting mainstream industries and companies. In 2017, a new trend emerged – nearly 30% of startups surveyed at leading innovation programmes worldwide were focused on problems facing the base of the pyramid and addressing environmental sustainability. Increasingly, technologists, entrepreneurs and innovators are looking at new social enterprises and startups as the means to bring transformative change to sectors like education, skilling, rural development and environmental protection. The source of capital for their early growth – philanthropy and charitable donors.

This trend reflects a growing realisation that the scope of humanity’s challenges are too big to be solved by just NGOs or government agencies. Our problems cannot be solved by following the status quo alone – new approaches are needed. A prominent example of this is the United Nation Sustainable Development Goals, which can only be achieved using current programmes and models if another $2.5 trillion is committed by donor nations. At a time when governments throughout the world are reducing their international development programmes, this is unlikely.

The biggest obstacle facing startups and social innovators is securing the “patient” capital required to pilot their technologies, grow themselves into fully-functional organisations and build the partnerships required for scale. Philanthropic and CSR funds are the capital for this sector – but those funds have only been available in limited quantities. Instead, the scarcity of philanthropic grants for social innovation and poverty alleviation is pushing innovators and startups to seek traditional private investment capital that is driven by returns rather than impact.

CSR and philanthropy can drive the rapid transformation of India by nurturing, financing and growing innovative solutions, social enterprises and startups from idea to impact. But in order to be effective, CSR and foundations will need to build their own skill sets to practice venture philanthropy rather than hands-off grant-making. They must learn to support unproven ideas and new entrepreneurs, and to develop big visions while testing them one village and community at a time. This will take time, but it’s the only way that the emerging class of development entrepreneurs will make a transformative impact on India in rapid fashion.

Only innovative solutions that drastically reduce the cost of intervention and the speed with which they are adopted can bridge this gap. Many innovations are not even new technologies – simply the scale-up of proven solutions that are new to the regions and sectors in which they are being applied. But many innovations are also truly scientific and technological breakthroughs that could solve problems that have flummoxed humanity for generations. The next five years in India will be very interesting as CSR and philanthropy begin to look at these new solutions as a means of creating radical change. There will be significant failure, but the success could be spectacular.

Nish Acharya is the CEO of Equal Innovation and author of “Transforming Ideas into Solutions: The Role of Innovation in Social Impact”.