Sustainable Development in Action: The Industry-Changing Approach of India’s Jio

Sustainable Development in Action: The Industry-Changing Approach of India’s Jio

September 25, 2018 0 By TheHumanRevolution

The inclusion of inequality in the UN’s Sustainable Development Goals (SDG) platform represents a shift in economic thinking, especially in how we understand inequality.

Long considered an unfortunate consequence of growth that the market would eventually correct, consistent inequality is now being given much more attention in the policy world.

Overall, the SDGs are an emphatic vote of confidence for more holistic and comprehensive approaches to development, and they provide a useful albeit incomplete path moving forward.

The Origins of the Sustainable Development Goals: The Millennium Development Goals

Our modern conception of development has its origins in decolonization. At the end of the Second World War, wealthy nations granted independence to their colonies and then sent money to promote economic development and political stability.

Poor spending habits by governments formed in the image of colonial rule kept this money away from the world’s poorest, while massive spending on infrastructure and the state created unmanageable inflation in many of the world’s most underprivileged countries.

All of this meant that Y2K began with around 30 percent of the world’s population still living in extreme poverty, which was barely a 10 percent decrease as compared to 1980, the first year in which we have reliable data. A new approach was needed, and the Millennium Development Goals (MDGs) were born.

What Were the Millennium Development Goals

In the year 2000, at the Summit of the United Nations, 191 participating nations agreed upon the MDG framework.

This was an effort to use past experience to unify development approaches around common goals, specifically to:

  1. Eradicate extreme poverty and hunger
  2. Achieve universal primary education
  3. Promote gender equality and empower women.
  4. Reduce child mortality
  5. Improve maternal health
  6. Combat HIV/AIDS, malaria and other disease
  7. Ensure environmental sustainability
  8. Develop a global partnership for development.

While this approach was far more comprehensive and collaborative than anything before it, these goals were measured using a narrow set of indicators. Furthermore, this narrow focus meant they did not sufficiently address the heterogeneity of many of the issues they were designed to solve. Yet they represented the beginning of an exciting new phase in the world of development.

The Sustainable Development Goals

The deadline for achieving the MDGs was 2015, and while some of these goals were left unmet, considerable progress was made, specifically in the areas of extreme poverty and primary school enrollment.

However, critics have long argued that these goals were too narrow in scope, pointing to the relatively stagnant rates of secondary school enrollment, as well as persistent poverty in many regions around the world, as evidence that achieving these goals did not mean “job well done.”

But the adoption of the SDGs demonstrates the collective opinion that the work is far from over, and that building on these marginal successes will require a herculean effort of coordination and collaboration.

Understanding Sustainable Development Today

The SDGs could easily be critiqued for being too broad. But they have value even if very few of the outlined targets are met. Specifically, they represent a widening of our understanding of development, and they are also a rebuke of the long-held belief that economic growth is a necessary and sufficient precursor to social development.

This is because while global GDP has exploded over the past thirty years, we’ve seen little progress in reducing the different forms of inequality. Not only has economic inequality sharpened, but gender and racial inequality are still stubbornly present. And now, digital inequality, also known as the digital divide, is rapidly putting up new barriers between the haves and the have nots.

The Slow March of Progress

The world is catching onto these truths. The “Me Too” movement in the U.S. represents a far more mature understanding of gender inequality than ever seen before, and it sets the stage for significant progress to be made in terms of achieving a level playing field for men and women, although there is much work to be done.

Further afield, India’s elite is beginning to recognize exciting new business opportunities in a country with 1.2 billion people, which has lead to progress in closing the country’s digital divide.

The Story of Jio

As one of the largest but poorest nations in the world, India has a unique challenge in front of it: turning its 1.2-billion-person population into an asset and not a challenge. Economic development is an important part of the nation’s future, as it is anywhere, but with wages—and the middle class—growing rapidly, India’s economic future seems bright.

However, inequality is still high in India. Men and women do not have the same opportunities, religious persecution is strong in conflicted regions, and regional inequality continues to be a problem.

All of these issues need to be addressed for sustainable development to occur, otherwise economic gains will be felt by too small a proportion of the population, setting the stage for social unrest and political instability.

Finding Opportunities to Make a Difference

In traditional economic thinking, servicing the poor is a futile venture. Since they have the least buying power, firms designed to reach this audience will produce less-than-desirable returns. But this is only true when we measure the success of a company in terms of its short-term profits, instead of its social impact

This logic was part of the reason few had hopes of narrowing India’s digital divide using traditional approaches. It simply didn’t make sense to service this group.

But this has changed. Recognizing a market failure when he saw one, Indian billionaire Mukesh Ambani, who is one of the richest men in the country, launched a wireless company named Reliance Jio Infocomm in 2015. In just under 3 years, it has turned the Indian wireless market on its head. How? By offering the same service to people for less

Adapting to What You Have

Ambani used the tremendous assets of his company, Reliance Industries, one of India’s largest, to cover the initial losses of providing mobile internet at a significantly reduced price. He could take this risk because he knew that if he successfully converted the majority of the country’s large but economically-poor population into customers, then he could create enough volume to make his venture a success.

And not only did he succeed in making Jio a successful business, but he forced competitors Vodafone, Airtel and many more to lower their prices to remain competitive, bringing the cost of mobile 4G internet down to a far more manageable price. Currently, a plan with unlimited calls and texts plus 2 GB/day of data costs around 600 Indian rupees (~10 USD). This is still a good deal of money for much of India’s rural poor, but judging by the growth in smartphone use since Jio burst onto the scene, it’s fair to say this strategy is paying dividends.

While this might not have been the intended effect, by recognizing the uniqueness of the market, Ambani and Jio have helped India’s population take an important step towards reducing one form of inequality.

Sustainable Development Moving Forward

This type of strategy won’t work in every country. But that’s exactly the point. The goal shouldn’t be to search for a silver bullet solution, but rather to get creative. A business doesn’t need to maximize profits if it can make a profit maximizing social impact. The case of Jio shows us this, and it also gives us an example of how economic growth can be used to address our most pressing social needs.