India needs greater thrust on innovation to become the third largest Economy, especially from the private sector
New Delhi: India entered the top 50 innovating countries for the first time in 2020 since the inception of the Global Innovation Index in 2007, by improving its rank from 81 in 2015 to 48 in 2020. India ranks first in Central and South Asia, and third amongst lower middle-income group economies points out the Economic Survey 2020-21 tabled by the Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman in the Parliament today
Greater Thrust on Innovation required:
India needs greater thrust on innovation to catapult itself to a higher growth trajectory and become the third largest economy in GHDP current US$ in the near future, says the Economic Survey 2020-21. This requires boosting gross expenditure on R&D from 0.7 per cent of GDP currently, to at least the average level of Gross Domestic Expenditure on( GERD )in other top ten economies (GDP current US$) of over two per cent. It also involves significantly calling up R&D personnel and researchers in the country, especially in the private sector.
Business sector should increase pending on R&D and Innovation:
The Economic Survey has stated that the Government sector contributes a disproportionately the large share in total GERD at three times the average of other large economies. However, the business sector’s contribution to GERD is amongst the lowest in India. The business sector’s contribution to total R&D personnel and researchers also lags behind that in other large economies. This situation has prevailed despite the tax incentives for innovation having been more liberal than other economies. India’s innovation ranking is much lower than expected for its level of access to equity capital. This points towards the need for India’s business sector to significantly ramp up investments in R&D. India’s performance on Innovations has been lowered than expected for its level of its accessing to equity finance, observed the Survey. It highlighted the need for boosting business sector contribution to total GERD from the current 37% to close to 68%. The Survey also suggests that the sectors total R&D contribution needs to be scaled from the present level of 30% and 34% personnel of researches respectively , to 58% and 53% respectively.
Rise in patent applications:
The Survey says that for India to become an Innovation leader, its residents’ share in total patents applications filed in the country must rise from the current level of 36%, at a CAGR of 9.8% to reach the top 10 economies by 2030.
According to the Survey, India should focus on improving its performance on institutions and business sophistication since higher performance on these dimensions have been noted to consistently suggest higher innovation. The Survey has suggested the key focus areas for boosting innovation performance which include – improvement of ease of resolving insolvency, ease of starting up a business, political and operational stability, regulatory quality cost of redencencies business etc.