Group9_B | SDG 1: No Poverty
“Overcoming poverty is not a gesture of charity. It is the protection of a fundamental human right, the right to dignity and a decent life.” — Nelson Mandela
Eliminating poverty in all its
forms remains one of the greatest challenges of humanity. Even though the
number of people living in acute poverty all around the globe has dropped by more
than 60% over the last three decades, there are still a huge number of
people living without a roof over their heads and struggling to meet the basic
human needs of food, clean drinking water and sanitation.
There are more
than 730 million people living in extreme poverty (less
than US$ 1.9 per day), that is every one
in ten people barely have enough to meet their basic daily needs. Now, the situation could
become worse, due to the crisis from COVID-19 which is driving millions of
people into poverty. To
make it worse, extreme poverty is a gender issue: for every 100 males between
the ages of 25-34 living in extreme poverty worldwide, there are 122 females in
the same situation within that age group.
SDG 1, No Poverty is aimed to end
poverty in all its forms globally. Its objectives involve ensuring that the entire
population and particularly the poorest and most vulnerable ones have access to
basic services, equal rights to economic resources, property, land control,
natural resources, and new technologies.
The increase in poverty is not only unfair
and a menace to the integrity of millions of people, but it also leads to
increase in inequality which in turn severely hampers the economic growth and
weakens social cohesion.
The primary causes of poverty –
unemployment, social exclusion, and vulnerability of a certain segment of
population to natural disaster and diseases, drive inequality and aggravate the
problem of malnutrition, lack of access to basic education, exclusion, and
discrimination. In general, it exacerbates the overall social and political
tension and leads to all sorts of conflict.
Due
to all these reasons, ending poverty in all its forms require the support of the
entire global community. Hence the United Nations set this as SDG-1 of its
seventeen Sustainable Development Goals, approved in September 2015.
SDG1 No Poverty, an Indian Perspective
With respect to India's poverty,
there are two findings on pre-and post-reform poverty patterns. Firstly, in the
post-1991 reform era, poverty decreased by 1.36 percentage points per year,
compared to 0.44 percentage points per year in the pre-reform period. Secondly,
in the post-reform era, poverty declined more rapidly in the 2000s than in the
1990s. Official figures based on the Tendulkar poverty line indicate that,
between 1993-94 and 2004-05, poverty decreased by just 0.74 percentage points
per annum. However, from 2004-05 to 2011-12, poverty decreased by 2.2
percentage points per annum.
As a result,
India is an early achiever under the MDGs in reducing income poverty and
achieving the goal. If appropriate policies are undertaken, India can achieve the
SDG goals. While World Bank estimates show that India has a 12 per cent poverty
ratio, the estimates based on national poverty lines are far higher. There are
still almost 300
million people below the poverty line in the country. In addition, poverty
is concentrated in a few states, such as Bihar, Uttar Pradesh, Chhattisgarh,
Jharkhand, and Orissa. It is also concentrated in a few social classes such as
Scheduled Castes and Scheduled Tribes. The SDG solution in India should not
only be to reduce the national poverty target, but to reduce poverty and
provide equal opportunities in some of the poorest states and SCs and STs. According to Social Economic and Caste Census
(SECC) data ,48.53%
were estimated as poor in rural areas. Indian policy makers must continue to
follow a two-fold strategy of achieving a high economic growth and a direct
attack through social protection programmes to combat poverty.
India has many social protection programmes, such as the public distribution system, school children's mid-day meals, integrated child development services (ICDS), old age pensions, etc. These are crucial for the risks of the poor to be taken care of.
Increasing Accountability for Businesses
Poverty is an issue which is normally assumed to have greater moral consequences for a business than significant impact on the bottom line. However, let us take up a firm which has little regard for anything apart from profits and then understand how poverty can be a major issue which impacts them as well.
Source: https://corporatefinanceinstitute.com/resources/knowledge/accounting/profit-and-loss-statement-pl/
As can be seen from the figure above, the firm has two
fundamental ways to increase its profits – reduce costs or increase revenues.
Poverty has an impact on both these aspects.
Cost side: Poverty plays a role in making goods and
services available to firms at a lower rate than what would have been the case
had no poverty existed. With lower levels of education among the population, a
firm can obtain unskilled or semi-skilled labour at a relatively cheaper rate.
However, skilled labour becomes scarce and hence more expensive. Even if we
analyse something like rent expenses – when people rise out of poverty and buy
homes, it increases rent costs for firms as well.
Revenue Side: An elimination of poverty would result
in a huge increase in the overall purchasing power of consumers and firms who
are able to capture these new customers would be in a better position than
their competitors. As of 2015, 736 million people lived on less than $1.9 a day.
If we assume that all these people rise to just about the above poverty level,
it would translate to $268.6 billion worth of consumer income per annum. To put
this number into context, Apple
had a revenue of $260.17 billion dollars in 2019.
Thus, like many other things – businesses can convince
themselves about how reduction in poverty can have either a positive or
negative consequence. Their stand and actions to combat this societal issue
largely depends on the belief they have in themselves, the values of the
company, and the kind of people in charge of them.
Corporate
Initiatives
Standard Chartered Bank aims to give access to financial
services to the poorer sections of the society who are underbanked by
partnering with Micro Finance Institutions. Perfetti Van Melle in India
developed initiatives at the local community level to improve the standard of
living for the under-privileged and reduce poverty. CitiBank has partnered with
the UNDP in the Asia Pacific region to raise funds and eradicate poverty. Cipla
played a crucial role in making the anti-HIV drug it developed accessible to
the most poor and vulnerable sections of the society. Despite the motives
behind donations remaining questionable, Goldman Sachs has been spending a lot
of money to fight poverty through its Analyst Impact Fund.
Thus, we see that poverty is an issue which is being taken
up and addressed by firms. This may be due to the reputational benefits it
brings, a long-term outlook or just to remain true to the moral values of the
organisation. Regardless of the motive, businesses would need to play an even
more active role in the future to achieve the vision entailed in this SDG by
2030.
Rethinking
Poverty Alleviation
Discussions in intellectual
circles including governments, think tanks, corporate social responsibility
committees and charitable foundations focus on alleviation of poverty from the
aspect of donations or contributions towards marginalised societies by
providing essential goods and services. This whole mechanism was questioned by
the works of the 2019
Noble Laureates in Economics through their book ‘Poor Economics’
where they try to uncover the necessity and mindset that determines how the
bulk of low-income households spend their money. The book outlines that rather
than grand development plans on a macro level, it is more impactful to make
small steps that affect smaller groups on people in a more meaningful way. The
approach suggested by the book emphasizes on establishing dialogue, on the
ground observation & randomized trials on smaller sections that try to
solve issues that are impeding the economic upliftment of the people involved.
The opposing camp on this line of
thought is a generalized approach which has been in practice for as long as we
can remember. This chain of thought emphasizes big-ticket expenses like large
government infrastructure products to create jobs, overarching education
reforms without identifying the specific educational needs of societies has
failed to show many results. This could be in part attributed to the
multi-cultural, diversity of regions like South Asia & Africa where most of
the world’s poverty is focused in. There have been many examples of success
stories of small targeted approaches that have shown results for example, small
farm businesses in Sudan while we have examples of the contrary in the MNREGA
a national employment scheme which must be given merit for uplifting people
from rural communities. However, it relies much upon the state government to
implement it. The lack of dialogue and specific projects to be undertaken, ends
up making the scheme a massive leakage of national resources without creating
much value for the nation.
This body of evidence emphasizes
the need for corporates & individuals to step up in taking up the mantle of
alleviating poverty in any capacity. Rather than donating money to charity, or
public funds it is much more efficient & effective to take up initiatives
that can affect small groups of people through small business assistance
programs, skills training, financial literacy etc. to create a more sustainable
impact in people’s lives as well as create value for the society.
Paving
the path Ahead
Public-private partnerships:
The bulk of infrastructure expenditure incurred at national level comes from
public resources. However, as part of the welfare state, the private sector
must share responsibility for growth with the public sector. In addition to
mandating the private sector to invest in development, financing through
Corporate Social Responsibility (CSR), public spending should be structured in
such a way as to catalyse and maximise funds coming from the private sector and
other domestic sources. Private investment is often motivated by risk-reward
factors. Government should make special efforts by promoting the growth of
corporate spending through successful market solution policies.
Implementing best practices
and leveraging South-South Cooperation: South-South Cooperation (SSC) has
become an expression of collaboration and partnership between countries of the
South, interested in sharing, learning, and exploring their complementary strengths
in order to go beyond their traditional position as recipients of aid. Relevant
lessons from Bangladesh on microfinance and job development from South East
Asian countries could be of vital use to India to solve its own poverty
problem. The strategy adopted by Bangladesh to build capacity for the poor and
women, especially those in the backward regions of the country, through a
well-planned education and training programme can also be followed in India.
The idea is to narrow the skills gaps in the workforce with a particular
emphasis on target groups. Bangladesh has also successfully introduced a
National Disability Action Plan involving all relevant ministries, in
partnership with various NGOs, to provide skills training, scholarships, free
micro-credit and education facilities to the disabled. Such models could be adopted
to further the cause of SDG-1 in India.
Monitoring accomplishment of
goal efficiently and regularly: Monitoring SDGs is a critical problem for
their implementation. The most significant problem with the control of SDGs is
output assessment. First, objective criteria for performance assessment under
SDG-1 should be defined. Since SDG-1 talks about eliminating poverty in all its
forms from all over the world, it needs an introspection of all forms of
poverty prevalent in different countries. Second, output assessment should be performed
regularly and at set periods of time. Third, the assessment agencies should be
autonomous and independent of the implementation agencies to preserve the
credibility of the initiatives. Fourthly, the objective methods listed above
should be configured for measurement and only one approach should be used for
measurement of a single parameter. Lastly, the frequent publication of these
steps should be made available to various interest groups and to the public.
References:
[1]
http://www.businessworld.in/article/SDG-Goal-1-On-Poverty-Challenges-For-India/06-02-2017-112492/
[2]
https://www.undp.org/content/undp/en/home/sustainable-development-goals/goal-1-no-poverty.html
[4]
https://blog.brightcities.city/sdg1/
[5]
2019
Noble Laureates in Economics
[6]
https://economics.mit.edu/faculty/eduflo/pooreconomics
[8]
https://www.wsj.com/articles/SB10001424052748703956904576287262026843944
[10]https://atlasofthefuture.org/project/cipla/
[11]https://www.citigroup.com/citi/news/2020/200929b.htm
[12]https://www.perfettivanmelle.com/assets/pdf/pvm_csr_global_2016.pdf
[14]https://borgenproject.org/tag/goldman-sachs/
[15]https://www.statista.com/statistics/265125/total-net-sales-of-apple-since-2004/
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