Dear Mr. Prime Minister,
While India is one of the fastest growing economies in the world, there are two fundamental problems with this growth. First, it is not fast enough. China has amply demonstrated that – not withstanding the reason (not a democracy, etc. etc.) it is possible for a large, poor economy to grow at 9-10% for over 20 years at a stretch. Second, it is not equal enough.India’s growth has benefited rent-seeking and power-holding actors far more, while leaving the state of the vast majority only marginally improved.
Unless India addresses these twin issues of ‘velocity’ and ‘quality’ of growth, it will lead to dangerous consequences – a demographic ‘time-bomb’ instead of a dividend, inflation-poverty trap, rising social tensions and diminished state power on the international stage. Clearly we cannot afford this prognosis.
The question is – what can India leverage in order to tackle these twin issues. We are a democracy and thus must accept a certain growth ‘deflator’ as compared to China. We are a diverse country, perhaps more difficult to manage than comparable large populations that are more homogenous. We are on balance resource-poor – three key ‘fuels’ for growth – oil and gas, water, and capital – are scarce.
However, there is indeed one resource where we are very rich. And that resource is: the innovation capacity of our people. Indians are universally acknowledged as amongst the most resourceful people on the planet, and ‘Jugaad’ is now a globally known trait, synonymous with Indians. It’s however a pity that this great resource, while ‘discovered and proven’ (to use the oil and gas analogy), has not been ‘recovered’ to anywhere near its potential. In almost all innovation metrics,India punches far below its weight. Its brilliant educators are nowhere when it comes to generating IP (as measured by patents). Its famed IT and pharmaceutical sector, similarly, spends very little on innovation and can boast of very few genuine, ground-breaking innovations. Even more disturbing, most of our innovation energy is directed to benefit companies and consumers internationally, with precious little ‘home-directed’ innovations.
India is, at this moment, on the cusp of a tectonic shift: a whole generation of entrepreneurs is taking shape. These entrepreneurs are young, hungry and want to change the world around them, fast. Just like a resource-intensive crop like rice needs an intensive injection of water and fertilizer to yield a bumper output, this entrepreneurial crop is a potential bumper crop that needs an intense resource-support. If it gets this support, just like we had the Green Revolution in the 60s and 70s, we could have a ‘Blue Revolution’ that can transform the nation. Why blue? Because sky is blue, and limitless. Indeed, as a tiny country called Israel has shown over the last 60 years, if there is one resource that is truly limitless, it is Creativity.
I would like to propose a way to support and accelerate this emerging innovation ecosystem. Just like there is an ‘education cess’ on income tax, the government should levy an ‘innovation cess’ on corporate tax. A 0.33% levy will generate approximately 10,000 cr in a year. This collected fund should be called the “India Transformation Fund” (ITF).
Rather than being managed exclusively by the government, it should be managed as a Public-Private partnership (PPP). Why? Because while the private sector brings high efficiency and good managerial experience, the public or government sector brings policy and an institutionalized delivery machinery. The two need to work together collaboratively.
The ITF will work like a Venture Capital Fund. However, with one critical difference. Unlike a typical VC that only looks at financial return, the ITF will look for ‘social return’. If a new technology or product or service or business model has the power and the potential to bring transformative change to the society, it should be funded as an entrepreneurial venture. In addition to just funding, the ITF will act as an incubator – providing broad-based support in terms of capital, mentorship, marketing and distribution channels, access to talent, etc.
The aspiration of the ITF should be to grow 100 transformative enterprises in a year. These should be spread across eleven key sectors where India needs transformation, namely, agriculture, education, electricity, employment, food and nutrition, healthcare, housing, security, transportation, water, and waste.
In order to achieve this, ITF should hold an annual competition called ‘The Transformative Innovation Prize’. Just like the famed ‘X’ prize led to private sector entrepreneurs develop private space flight as an affordable technology, the ‘power of the prize’ needs to be leveraged. In each of the above ten economy sectors, ITF will host a ‘Grand Challenge’ and the Top 10 prize winners should be funded as ventures. An example of a grand challenge, in say the ‘security’ sector could be “Come up with a low-cost technology that can detect and track any intrusion into our land-borders”.India is plagued with cross-border terrorism and illegal immigration; imagine the transformative impact such a technology could have!
To incubate the ventures in each sector, there should be 10 incubators setup across the country, one for each sector. These incubators will provide world-class ecosystem for innovation to happen and will be located at suitable locations. The most suitable location is not where a resource is found in abundance, rather where that resource is the most scarce (as they say “scarcity is the mother of invention”). For instance, the ‘Water’ incubator could be in Rajasthan while the Employment one could be in the North East.
The above innovation ecosystem and accelerator framework will unleash huge transformative change across the country. USA has done it. Israel has done it. Our time has come. It is time to act.
A passionate citizen,
Image Courtesy: [The Viewspaper]
Disclaimer: The above article is the personal opinion of the author and not of the publication.