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India can’t be complacent on innovation

There is simply no time for complacency for India when it comes to matters of innovation.

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Innovation-Growth

The New Year is upon us. It has been 17 years into the 21st century and if one word has to define this period, ‘innovation is bound to reign supreme. Technological innovation in every field has taken place at such a rapid pace over the last two decades that most of it is taken as given.

It is hard to imagine that a world obsessed with acronyms like AI, VR, and EV was still very much dependent on the post office barely 17 years ago. It is unfathomable and potentially scary from some aspects as to what the future holds for mankind.

With the world innovating at breakneck speed, no country wants to be left behind the curve. China is the latest kid in the block. It is no longer the low-labour-cost country that makes it the manufacturing powerhouse of the world. Now, the country’s manufacturing strengths lie in its strong supply chain networks and advanced production knowhow. In fact, in its 13 Five Year Plan that began in May 2016, China laid out a roadmap to become an “innovative nation” by 2020 and an “international innovation leader” by 2030.

Even before these goals were set, the country had doubled its spending on R&D between 2000 and 2016 from 0.9 percent of its GDP to 2.1 percent. It is no surprise then, that the greater Shenzhen-Hong Kong area finds itself ranked second in terms of global inventive clusters as measured by patents.

It is clearly time for India to adopt innovation as a paradigm and a long-term principle to be competitive on the world stage. Like China, it is critical that India works upon building an enabling conducive environment for innovation to take place. This includes, but is not limited to, access to technology required for scaling, availability of funding, leadership and skill, and also a market for all this.

As per the Global Innovation Index, India has shown consistent improvement since 2011 and its performance has been ahead of the average lower-middle- and upper-middle-income countries of the world. However, the India State Innovation Report 2017 has brought out some interesting highlights on the state of innovation in India.

First, on a national scale India lags considerably behind the major economies of the world. As of 2015, India spent 0.88 percent of its GDP on R&D while Brazil, the US and Japan spent 1.2, 2.8 and 3.4 percent respectively. As for patents, India had filed 17 per million people while Brazil, China, the US and Japan were at 34, 541, 910 and 3,716 respectively. Finally, the India’s share of global publications stood at 4.2 percent while China and the US were at 20.2 and 25.3 respectively. Therefore, there remains a vast gap for India to cover if it to catch up with the global economies in the field of innovation.

It is not a preposterous argument to make that the economy which stays ahead in the race for innovation will dictate global dominance. As things have panned out over the last year, USA seems to have been ceding that ground to China. Denying realities like climate change to support industries of yesteryears like coal and closing doors on the very people who built the country seem inimical to the innovative spirit that has come to define America. A huge vacuum will probably be left behind, and India needs to grasp the opportunity while the time is ripe.

Second, coming to the sub-national level, India shows a very mixed performance. Delhi, Tamil Nadu and Maharashtra were the most innovative states in 2017. A three-way categorisation was also done based on the classification for developmental stages of economies by Michael Porter, considered the guru of competiveness. Delhi, Karnataka and Uttar Pradesh turned out to be the leading states in their respective stages.

A striking feature of the state performance on innovation is that there is a clear demarcation running across India where the western and southern belt of states score considerable better than the rest of the country. This belt of states also performs economically well than the rest of India, but per capita income explains only 60 percent of the innovation scores. Higher industry presence and better prevalence of institutes of higher education along with improving linkages between the two has a substantial impact making the environment conducive for innovation across these states.

However, there are a multitude of challenges faced even by these states in undertaking innovation. The first and most basic one is that the university system in India lacks focus on research and innovation. Inadequate funding dedicated to education does not help in building adequate facilities for research either. Second, the patenting process is quite cumbersome in India and significant amount of resources need to be devoted towards it, something which the industry typically lacks. Finally, India lacks stringent regulations and IP laws, which hinder any innovative activities. It is a telling fact that in the International IP Index released by the US Chamber of Commerce, which ranks 45 economies based on patents, trademarks, copyrights, enforcement and international treaties, India ranks 43.

There is simply no time for complacency for India when it comes to matters of innovation. The country has a perfect opportunity to get onboard the innovation train that is swiftly chugging away beyond its reach. Almost 15 percent of the start-ups in Silicon Valley have been founded by Indians. We clearly have the capability to do the same in India. Only the enabling factors are lacking.

(Amit Kapoor is chair, Institute for Competitiveness, India. The views expressed are personal. He can be contacted at [email protected] and tweets @kautiliya. Chirag Yadav, researcher at Institute for Competitiveness has contributed to the article)

Analysis

Blow to BJP ahead of 2019 Lok Sabha polls – News Analysis

In the first instance of a party getting majority on its own in 30 years, BJP won 282 seats in Lok Sabha in 2014. The BJP-led NDA had won 336 seats out of 543.

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Congress workers Karnataka civic polls

The results in the Hindi heartland states of Madhya Pradesh, Chhattisgarh and Rajasthan came as a major shock for the Bharatiya Janata Party (BJP), which has won all the major states barring Delhi, Bihar, Punjab and Karnataka in elections held after the sweeping 2014 Lok Sabha victory.

The BJP was routed in Chhattisgarh and defeated in Rajasthan and Madhya Pradesh in closely-fought contests. The party mostly banked on the image of Chief Ministers Raman Singh, Shivraj Singh Chouhan to lift the party’s fortunes.

In Rajasthan, where opinion polls had written off the BJP, Prime Minister Narendra Modi and party chief Amit Shah put in extra efforts, besides banking on the hardcore Hindutva image of Uttar Pradesh Chief Minister Yogi Adityanath, to take the battle to the Congress, but still lost.

The BJP, however, managed to open its account in Mizoram, where the Mizo National Front (MNF) ousted the ruling Congress partty, but saw its numbers fall from five to one in Telangana, where the Telangana Rashtra Samithi swept the polls.

The results of these five states, which were dubbed the semifinals ahead of the next general elections in April-May 2019, could be a factor in the battle between the BJP-led National Democratic Alliance (NDA) and the Congress-led opposition.

The major issues raked up by Congress, specially the farm loan waiver amid an agrarian crisis across the country, employment and anger among upper caste, seems to have worked in its favour and could haunt the ruling dispensation if remedial measures are not taken.

The BJP is not ready, however, to accept the defeat as a referendum on the Modi government.

Union Finance Minister Arun Jaitley said issues in state elections are entirely different. The BJP won Madhya Pradesh, Rajasthan and Chhattisgarh in 2003 but lost the Lok sabha elections next year, he pointed out.

The general elections in 2019, he added, would be fought around Modi’s performance, with people voting for a tried and tested leadership instead of a non-ideological opposition coalition which is bound to collapse sooner than later.

The Congress, which had a disastrous performance in the 2014 Lok Sabha elections and suffered successive defeats in various Assembly elections, smiled for the first time after defeating the BJP in a direct contest in the three crucial states in north India.

Party president Rahul Gandhi, who campaigned vigorously, said the Assembly election results were a referendum on Prime Minister Narendra Modi’s non-performance on issues of unemployment, agrarian distress, corruption and negating the ill-effects of demonetisation.

Out of total 678 Assembly seats in the five states in the current round of elections, the Congress has won close to 300 seats while the BJP managed to win over 200 seats. In the 2013 Assembly polls, the BJP had won 377 seats in Madhya Pradesh, Rajasthan, Chhattisgarh and Mizoram while the Congress had won only 122 seats in these states.

In the 2014 Lok Sabha polls, the BJP had won 62 out of total 83 Lok Sabha constituencies of Madhya Pradesh, Rajasthan, Chhattisgarh, Telangana and Mizoram. Now the three Hindi heartland states will be ruled by Congress and the its impact would definitely be felt in the 2019 Lok Sabha polls.

In the first instance of a party getting majority on its own in 30 years, BJP won 282 seats in Lok Sabha in 2014. The BJP-led NDA had won 336 seats out of 543.

Its allies include the Shiv Sena, which has been on the war path for a while. Similarly, N. Chandrababu Naidu’s Telugu Desam Party (TDP) and Upendra Kushwaha’s Rashtriya Lok Samata Party (RLSP) have walked out of the NDA.

Since 2014, BJP has managed to retain just six Lok Sabha seats in by-polls. It won Lakhimpur in Assam, Shahdol in Madhya Pradesh, Beed and Palghar in Maharashtra, Vadodara in Gujarat and Shimoga in Karnataka.

In the last four years, the party has lost Lok Sabha by polls in Ratlam in Madhya Pradesh, Gurdaspur in Punjab, Alwar and Ajmer in Rajasthan, Kairana, Phulpur and Gorakhpur in Uttar Pradesh, Bhandara-Gondiya in Maharashtra and Bellary and Mandya constituencies in Karnataka.

The BJP, however, maintained the verdict was a mandate against the state governments and not against the Modi government.

“The results in five states clearly show there is no uniform trend across the country and local factors determined the outcome in each state. This is evident from the fact that even Congress suffered massive defeats in Mizoram and Telangana.

“Despite 15 years of anti-incumbancy in Madhya Pradesh, the BJP has put up a fight in Madhya Pradesh and has a major comeback in Rajasthan. The BJP’s and Congress’ vote share in both the states in Mandhya Pradesh and Rajasthan is almost tied which clearly show that the BJP has the potential to comeback with big victories in 2019 Lok Sabha polls,” BJP Spokeperson G.V. L. Narsimha Rao told IANS.

He also said whenever Congress has tied up with a regional party, it cost them votes.

(Brajendra Nath Singh can be contacted at [email protected])

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Analysis

Election losses in Hindi heartland worry BJP in UP

Is a question that is haunting many in the BJP. For a party that stormed to power after 16 years of political exile, the stunning 2017 Assembly victory is beginning to look like history.

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Modi Shah

Lucknow, Dec 12 : With three major states in the Hindi heartland slipping out of its hands, the Bharatiya Janata Party (BJP) is worried in Uttar Pradesh where even party insiders complain about poor governance and growing lawlessness.

“What if this repeats here too?” is a question that is haunting many in the BJP. For a party that stormed to power after 16 years of political exile, the stunning 2017 Assembly victory is beginning to look like history.

Barely a year-and-a-half later, the popularity ratings of the state government, specially Chief Minister Yogi Adityanath, are worryingly down.

Many of his decisions, like renaming Faizabad to Ayodhya and Allahabad to Prayagraj and his use of acidic language, have soured his appeal, even among BJP supporters. BJP’s allies too are openly speaking against the way the state is run.

“There is a lot of corruption all round. Officials are not even listening to the Chief Minister’s directives,” said Om Prakash Rajbhar, who heads BJP ally Suheldev Bharatiya Samaj Party (SBSP) and is a cabinet Minister.

A perpetual rebel who has often broken ranks with the ruling party, Rajbhar’s disillusionment, unlike that of others, is out in the open.

There are, however, many senior Ministers in the ruling party who complain in private over what they feel is the poor and lacklustre performance of the BJP government.

“The government is directionless and has failed to inspire confidence,” says a party veteran who taunts the party leadership for not meeting the people’s aspirations.

“We are bogged down by a haughty bureaucracy which refuses to fall in line. As a result, our party workers and supporters are disgruntled,” he added.

A BJP General Secretary is accused by a Minister of trying to corner major tenders in irrigation and PWD departments. The Minister moaned that party leaders failed to understand the public mood.

Samajwadi Party spokesperson Abdul Hafiz Gandhi for once agrees with the BJP leaders’ assessment and points out that except for “hatred and rumour mongering”, the BJP government has failed to achieve anything in one-and-a-half years.

Lawlessness, he adds, continues in the state. And despite lofty claims and reckless police “encounters”, in which critics say many innocents have died, criminals continue to have a free run.

An Apple executive was shot dead by a policeman in cold blood. And now a police officer too was shot dead during mob violence in Bulandshahr. Many children have died in poorly-managed state-run hospitals.

“So what has changed?” asks a senior BJP leader, speaking on the condition of anonymity.

Former Minister and Pragatisheel Samajwadi Party (PSP) President Shivpal Yadav says the government was not only anti-farmer but was also fanning communal passions which he says was not in the interest of the state.

The BJP’s defeats in Rajasthan, Madhya Pradesh and Chhattisgarh show that the time for the BJP and Prime Minister Narendra Modi was “fast running out”, he added.

Another Minister, also not wishing to be named, told IANS that after initial bravado Adityanath had failed to control the bureaucracy and was dependent on a small coterie of officers.

He pointed out how while the previous Samajwadi Party regime made giant strides in infrastructure, the present one had not been able to deliver results.

“The 308-km Agra-Lucknow Expressway was built from scratch in 18 months flat. We have not been able to even start the Poorvanchal Expressway,” he rued.

The coming together of bitter rivals Samajwadi Party and the Bahujan Samaj Party (BSP) for the 2019 Lok Sabha polls is also sending the saffron camp into jitters.

(Mohit Dubey can be contacted at [email protected])

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Analysis

Column: “Sadak, bijli, paani”: Basic, yet game-changing – Behind Infra Lines

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Given the varied use of government spending, the question remains on how important it is to focus on the “basic” infrastructure services such as roads, electricity and water — the classic troika of “sadak-bijli-paani”.

Essentially, “basic” infrastructure such as roads, water and electricity are critical drivers of economic growth. Creating the “basic” backbone infrastructure not only delivers value through the usage of the asset or service but, inter alia, offers even greater value through the ecosystem that can be built around the core assets.

A recent tweet by Vinayak Chatterjee, Chairman, Feedback Infra Group, illustrates an example of the value-creation through building “basic” infrastructure: “As per Power Ministry, 15 states now have 100% household electrification. Likely consequences are also emerging like increased sales of electrical appliances.” It drives home the point that electrification infrastructure has a critical impact on creating value through multiplier effects on the economy, boosting demand for goods and services down the consumption chain.

For all the talk of FMCG companies accessing rural markets, consumer durable companies would do well to pay more attention to the infrastructure creation trends in the economy. For example, increased electrification creates entirely new markets for electronic goods-focused consumer durables companies.

However, the creation of a new market is not limited only to the product being sold. Given the relatively higher ticket-value nature of consumer durables, there is a new market for lending businesses as well. This opportunity in the lending space is to finance some part of the consumption trend. This opportunity is applicable mainly to well-entrenched incumbent lending institutions looking for the next phase of growth.

For instance, there might be a Non-Banking Financial Company (NBFC) with a significant business in financing the two-wheeler market in and around the areas seeing increased electrification. The increased electrification trend allows the NBFC to now access a substantial component of existing customers for a new product line of consumer durables. Thereby, the NBFC can deliver value to its stakeholders by building on an existing distribution network and credit information repository.

Additionally, there is a business opportunity for the logistics sector as well. A new market in consumer durables creates the need for transportation, storage and distribution of products in new areas. The above is an example of how “basic” infrastructure creation creates positive multiplier effects throughout the economy. Most importantly, new industries are established, and existing industries can expand into new areas thereby creating jobs and facilitating investments.

For investors focused on India, both in the private and public markets, current trends such as increased electrification create investment opportunities. For example, more electrification begs an important question: Which segment of the supply chain does the investor want to invest in to generate investment returns?

Do investors want to invest in consumer durable companies that can tap into new markets? Do they want to invest in financial firms that can benefit through funding of the consumption? Or do they want to invest in the logistics needed to create the new supply chain? Regarding direct versus non-direct investments, investors have a choice of directly investing in logistics real estate versus investing in publicly-listed companies that have significant exposure to the new markets. The single biggest takeaway is that the creation of “basic” infrastructure creates investment opportunities for all types of investors across the spectrum.

It is also important to note that besides the creation of new infrastructure, significant value creation is possible through improving the quality and maintenance of existing “basic” infrastructure. While new projects tend to grab most of the headlines, gradual quality improvements and effective maintenance of infrastructure is value-additive as well.

In summary, the creation of “basic” infrastructure delivers value on many fronts. Crowding in private capital, job creation, a higher standard of living, access to basic amenities and expansion of business opportunities are some of the obvious advantages that come to mind. Going forward, both central and state governments would do well to build and improve the “backbone” infrastructure.

(Taponeel Mukherjee heads Development Tracks, an infrastructure advisory firm. Views expressed are personal. He can be contacted at [email protected] or @Taponeel on Twitter)

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