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Budget 2024, among other significant announcements, revealed India's strong commitment to Research and Development (R&D), innovation, and growth. As known, the last budget substantially boosted basic and academic research and industrial collaboration by providing INR 2000 Crore through Department of Science and Technology (DST) for the National Research Foundation. This year, another ambitious declaration aims to support private sector innovation activities in high-technology areas by creating a corpus of INR 1 lakh crore to lend patient capital for risky endeavours. Though these steps are in the right direction to incentivise the private sector to commit to innovation, a holistic understanding of the innovation ecosystem will further provide pointers to improve it.
For instance, an important question is why India's position in the Global Innovation Index has stagnated for some time now. India retained its position in the Global Innovation Index (GII) at 40 in 2023. It remains a record holder by being an innovation overperformer for the 13th consecutive year in its income group. To unravel this, one must understand that the generation and diffusion of innovation are two distinct but interlinked innovation processes. The gap between the two is apparent in the Indian context, necessitating policy interventions. For instance, among the different subindices of the GII, the most glaring difference in the Indian rank emerges in Human capital and research. This subindex captures the inputs made to the innovation ecosystem. The graduates in Science and Engineering in percentage terms are the strength of India, though Researchers per million of the population comes across as its weakness. This situation highlights that most Science and Engineering graduates do not consider research a lucrative career prospect. Since 2018-19, schemes like the Prime Minister's Research Fellows (PMRF) have attracted the best talent into the research. More such schemes at different levels are much needed to add to the quantity and improve the quality of research in higher educational institutions in the country. Improving cross-linkages between Higher Educational Institutes (HEIs) and research laboratories can be a low-hanging fruit that can increase the number of researchers without adding to the burden of creating new infrastructure. Joint research projects and creating avenues for mobility among the research laboratories and HEIs can be encouraged to accomplish this objective. A recent report on publicly funded R&D organisations by Centre for Technology Innovation and Economic Research (CTIER)* to the Principal Scientific Adviser (PSA) has pointed out that such collaborations will increase the efficiency of publicly funded research organisations.
In the same subindex, India fares poorly on School life expectancy, which indicates a lower probability for children to spend more years in education and lower overall retention within the education system. Further, pairing the low retention with dismal performance on the pupil-teacher ratio reflects the primary reason that students do not go to school as there are no teachers. There is an urgent need to focus on education, particularly innovation in school education that will help prepare the next generation of India and encourage millions of bright minds to provide brilliant solutions to national and global problems.
Regarding infrastructure for innovation, India has income group strength in online services, which implies that among the low-middle-income group countries, the Indian government has been using digital infrastructure extensively to provide services. Despite most such services, which help the lower strata of society, Information and Communication Technology (ICT) access and use are minimal. Indeed, these are two major weaknesses of the country in this subindex. ICT access index includes a percentage of the population covered by mobile networks, mobile cellular telephone subscriptions per 100 inhabitants, international internet bandwidth (bit/s) per internet user, and the percentage of households with internet access. Most of these points include significant investment in digital infrastructure by the state.
What is more worrying is the low rank on ICT use. Recent technologies require education to create awareness among millions of people about modern technology. This weakness also aligns with the earlier point on limited education and its impact on the population. Both go hand in hand as the educated population will utilise ICT to access information and benefit from the different schemes. The linkage between low investment and performance in education and lack of use of ICT also relates to the lower diffusion of technology to every section of the society. This frailty alludes to a more consequential problem in the future where the gap in education leads to a digital divide, leaving the majority out of the growth process. The link between the generation of new ideas and their diffusion has a loopback effect. If India intends to unleash its younger potential for innovation activities that translate into novel products for the betterment of society, school education and its quality should be the focus, once again.
The next decade's agenda for fostering the innovation ecosystem is thus evident, as is the investment in education. Such investments will produce a sustained and efficient stream of novel ideas translated into new products for the Atamnirbhar (Self Reliant) Indian. At the same time, this step might ensure the diffusion of such new technologies to the masses.
* R&D Report Vol 1.pdf (psa.gov.in)
The authors are Dr. Ruchi Sharma Professor of Economics, IIT Indore and Dr. Niranjan Shastri, Associate Professor (Finance), SBM, SVKM’s NMIMS, Indore.
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