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Past its sell-by date

Philanthropy cannot end the plethora of problems that our country faces. What we need is a new genre of service delivery institutions, argues K Anji Reddy.

india Updated: May 15, 2012 22:12 IST
K Anji Reddy
K Anji Reddy

I recently received a letter from Azim Premji inviting me to join him, Ratan Tata and Bill Gates on June 1 in Bangalore for a discussion on philanthropy. I politely turned down the invite, but not before explaining how in multiple disciplines I have been doing large-scale successful programmes across India with various state governments as partners. These efforts have impacted over five million lives by putting to best use over Rs 500 crore of government funds at a time when ‘implementation’ is considered a serious problem.

Let’s look at some burning issues we face today. More than two out of five children are malnourished, more than half the children in elementary schools are at least three grades below their age in competencies. While more than half of India’s population was born post-liberalisation, we are yet to skill and employ most of them. Small and marginal farmers continue to struggle for livelihoods. Most of India’s water sources are not safe and potable; poor sanitation is accepted as normal, primary healthcare continues to be in the realm of schemes and missions, not affordable quality services for all. The list can be extended to a few more challenges the nation faces today. This is despite rapid progress in infrastructure, power, mobile connectivity and sustained economic growth over the last decade. What does all this point to? There are two broad lessons for all of us.

The first is that philanthropy cannot solve these gigantic issues. The budget outlay for the Integrated Child Development Services programme in the next five-year plan period is over $9 billion and for education over $20 billion. Against this, the total philanthropy spend is barely $1 billion.

The way forward seems to be a new genre of service delivery institutions. You call them ‘post-reform development service enterprises’ for want of a better term. These will be run by passionate, young professionals who will use best of management principles with a focus on efficiency and outcomes. They will partner with the government for one-time subsidies for capital investments or for tapping budgetary allocations. They will make the poor pay a very affordable user fee wherever possible. This triangulation will result in the creation of a new industry that we should soon recognise, and create conducive laws to make it flourish. This way India will show the world a new order that can end poverty and bring about a dramatic improvement in the overall quality of life.

I shall illustrate with two examples. One is the popular mid-day meal programme that came into force in early 2001. Wherever self-help groups were well-organised, they agreed to cook meals in schools. But in urban areas with no room in schools and remote starvation and drought-hit regions — Kalahandi, Bundelkhand, desert regions, tribal belts — the unit cost of meals was far above the government budgets. Raw materials were also not available. Here, centralised kitchens with the government playing the role of a regulator sponsoring the daily cost and new organisations setting up kitchens with corporate donations became the new solution. I am told over five million un-reached children are now fed like this.

Another example is safe drinking water programmes with new enterprise-government partnerships. Seeing some successful scaled up experiments, the governments of Punjab and Haryana came forward and through tenders opened up the challenge of decentralised purification, maintenance and supply of village water sources at a pre-fixed price. These post-reform development entrepreneurs, as I call them, got a one-time subsidy from the state governments for the capital cost and run their enterprise with the efficiencies reaped in management and service delivery mechanisms.

In the case of water it is more striking than midday meals. In the worst fluorosis-hit region of Nalgonda in Andhra Pradesh when a water treatment plant was inaugurated by Montek Singh Ahluwalia a few years ago, little did I imagine that in a short time this will be copied by a thousand micro-entrepreneurs, resulting in a near total eradication of the problem.

This is the new role of a pro-reform government that should move beyond mere enactment of rights and entitlements. Right to food, education and work will look good in the short term, but the need of the hour is a framework for these rights to be honoured. From experience, the answer lies in governments embarking on new development reforms that will create a million enterprises. These water and midday meal enterprises are battling it out with thin margins given the abysmally low purchasing power of their customers. This is where the finance minister has to step in. Given that these specialist enterprises are treated legally on par with other corporates, why can’t we offer them less taxation? Why can’t we exempt them from the flat 39% corporate tax?

To conclude, let us not get carried away by philanthropy as a solution to end poverty. Nor can affirmative action or forced spending from profits lead to any impact on the lives of the poor. The government should force corporates to invest in equity in such development enterprises. Imagine then corporates mentoring these new entrepreneurs to solve development problems in scale.

We are living in a time where philanthropy is an idea whose time has expired.

K Anji Reddy is founder chairman of Naandi Foundation and Dr Reddy’s Laboratories Limited

The views expressed by the author are personal

First Published: May 15, 2012 22:10 IST