Development Of Underdeveloped Areas Or Sectors

This write up explains about the details of process of developing an area or sector of industry. It points out that it is not possible to leave everything to market forces above; due to the stagnation of the past it is necessary to 'pump in' right type of knowledge/skill bases and some amount of initial fund to trigger the development processes. Even the delivery of knowledge bases/skills will require a system and set of professionals and that requires funding with good degree of flexibility. Many other insights and a mathematical equation are given. It will be useful for all those who are sincere about developing an underdeveloped area or to help poor people or to develop a backward sector of industry. The role of govt. grant, funds of philanthropist or Corporate Social Responsibility (CSR) is described.

  1. There are a number of accelerating business activities in India; many daring entrepreneurs in IT, Communications, Pharma sector, BPO, KPO, Automobile and auto-component sectors, textile, construction etc; also many Indian companies are taking over companies from abroad. Many Indians are working in different parts of the world and are succeeding intellectually. These are all items all of us can be proud of. All these are market driven activities. They are globally competitive.
  2. However an honest estimate will show that only about 30% of Indians are covered by these capabilities and resultant benefits of good life. Most other Indians are having marginal existence. It will be wrong to expect that market forces alone can take them forward to a level of global competitiveness. They do not require continuing subsidies but the right type of 'boosting' to a reasonable level from which they can sustain further. This boosting is not just a one-time loan or grant. It requires sustained effort to provide knowledge & skills (not just S&T or technical but business aspects like marketing and soft skills like customer relations etc) for a few years and some financial help to begin with on right items at the right times. Most of the government grants or loans, even when delivered without the usual 'leakages' (you know what I mean ! ! !) do not succeed well because the whole thinking is compartmentalised - some women programme, or water or seed etc. Life is more holistic and the aim should be to create the capability for earning a livelihood (in all its aspects from work to final sale of product or service and obtaining money - and also continually keeping themselves updated for the market needs) and to provide money sources. And create a dynamic organisational system inside - not hierarchy but where group actions can given everybody a security and linkages.
  3. Many in private sector and also some armchair economists think that only those which are amenable to their market thinking are worth and they don't have hearts or patience for the initial push. 'If we can do to a business plan, they should also do so. Otherwise it is subsidising laziness or unproductive effort. Let them take a loan and start their work.' Banks will say 'we are sitting with lots of money. We give to any good proposal even for poor people.' The catch is in the 'good proposal'. Making a good proposal, a bankable proposal requires a number of knowledge bases integrated : the strength of the local area (weaknesses too !); resources; technical knowledge; training possibilities; markets for the products/services; risks; variability in markets; possible competitors; human resources in the area; their ability to learn/work as team etc. Only then a long term viable and (economically/financially) sustainable projects can be formulated. Such proposals cannot be formulated by poor people or those who are in underdeveloped areas or even those who are in the underdeveloped or backward sectors of industries. They need help for knowledge inputs. (Please elsewhere in this website about Knowledge Intermediation). Such help requires money (as it can only come from those who are fully absorbed in the market economy - i.e. those 300 million Indians !) Most NGOs require money to do useful work. One cannot expect Sanyasis or Sanyasinis to give such inputs. There is a limit to personal sacrifices of individuals and one cannot build a sustainable economy or society based on such individual sacrifices and self-denials.
  4. To 'procure' such knowledge requires a system which is not a mere secretariat or 'coordinating body'. It requires trained and experienced professionals just TIFAC did under the leadership of (late) Prof S K Sinha during 1999 in Bihar and many other parts of the country (They are doing well now.) TIFAC provided seed money for such efforts and created a system which will draw upon several other actors - thus speed up the process. But often it is difficult to find such funding. Some money available from foreign agencies do not carry such flexibility. They will have rigorous models and procedures for a model. Some 'clever' agencies write such proposals, get lot money and show a model. Often you will find many costly publications and publicity. Replication is often poor. So the initial money for procuring knowledge bases should be very flexible without show or unnecessary review meetings or consultant reports which take away most of the funding. Therefore for procuring (or giving such knowledge base to the underdeveloped areas) knowledge-leader need to be carefully selected and you give most of the tasks to him or her and also provide him/her funds with flexibility. Innovative monitoring systems are required with low cost but with good rigour.
  5. The aim is not to keep on giving knowledge and funds. It is necessary to make the recipients to become commercial - as soon as possible.
  6. I have developed a mathematical equation to explain this reality.
    Economic Activity = C1 + C2
    C1 = Govt. Grant or Funds From Corporate Social Responsibility (CSR) Philanthropy
    C2 = Commercial Investment Funds
     All the economic activities which are domestically competitive or globally competitive, which are in the middle of market forces will have
    C1 = 0
     The 300 million odd Indians live in this world and therefore conditioned by it.
    But where there are various forms of underdevelopment still in them will require a
    C1 = finite number
    C2 = cannot take off without C1 available for a period
     C1 cannot be a permanent feature. If so, then that programme is not economically viable and should be closed down. If well selected, C1 will go down over a period and become nearly zero.
    If one wants to take them to the next level, some more new types of C1 for different activity may be pumped. Just as first gear, second gear, third gear, etc.
    If right knowledge bases/skills are not given, then it won't go to first gear fully - often the car has to be pushed. It will start and stop. C1 will be a constant without falling. One has to choose the right system and knowledge/skill bases to ensure that C1 'tends to zero' over a period.
  7. All those who are sincere to develop an area, sector or a country, may please understand the above realities and arrange to pump the right type of C1 at the right time with the right type of leader to 'trigger' the developmental process.

Y.S.Rajan