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Economic Survey 2021 Says Indian Private Sector Needs to Step on R&D & Not Rely on 'Jugaad Innovation'

File photo of Union Finance Minister Nirmala Sitharaman.

File photo of Union Finance Minister Nirmala Sitharaman.

India ranks 48th among 131 countries for innovation, its highest ever rank, but needs to step o R&D, the government’s annual pre-budget document on Friday said.

The latest edition of the Economic Survey said that India's private sector needs more work on research and development (R&D)and mere reliance on 'jugaad innovation' will hamper crucial opportunities in the future.

India ranks 48th among 131 countries for innovation, its highest ever rank, but needs to step o R&D, the government’s annual pre-budget document on Friday said. According to the Global Innovation Index (GII), India’s ranking has improved from 81st in 2015 to 48th in 2020. India ranks first in Central and South Asia and third among lower middle-income group economies.

“Indian firms also perform below expectation on innovation for their level of access to equity finance, which is the most crucial for innovation. India must significantly ramp up investment in R&D if it is to achieve its aspiration to emerge as the third-largest economy in terms of GDP. Mere reliance on “Jugaad innovation” risks missing the crucial opportunity to innovate our way into the future. This requires a major thrust on R&D by the business sector,” the survey said.

The government expects businesses to produce more patents and original research, and says it does “a disproportionate amount of heavy-lifting on R&D by contributing 56 percent of the gross expenditure on R&D, which is three times the average contributed by governments in the top ten economies”.

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In comparison, the business sector contributes 37 percent of the gross expenditure on R&D compared to an average 68 percent in the top 10 economies globally.

Startups need to play a key role in fostering innovation and increasing India’s share of patents globally.

“The Startup India campaign of the Government of India recognises entrepreneurship as an increasingly important strategy to fuel productivity growth and wealth creation in India. This assumes greater importance in the context of enhancing private participation in innovation in India - in terms of contribution to gross expenditure on R&D, R&D personnel and researchers, and share in patents filed in the country,” the survey said.

The innovation ranking also points out the places where India falls short.

India ranks 107th in the education sub-segment, mainly on account of ranking 118th on pupil-teacher ratio in secondary education; 115th on new business per thousand population in ages 15-64; 108th on tertiary Innovation.

The numbers are getting better but once again need more thrust from the private sector, the government has said. India ranks 105th on ease of starting a business and 101st on females employed with advanced degrees.

The survey says India performed well regionally and in its income category, ranking first in the GII rankings in Central and South Asia and third amongst lower middle-income group economies. India performed above expectation for its level of development.

India ranks 27th on Knowledge and Technology Outputs and 31st in Market Sophistication, its highest rankings among the various categories. It ranks 55th in Business Sophistication, 60th in Human Capital and Research, 61st in Institutions, 64th in Creative Outputs and 75th in Infrastructure.

first published:January 29, 2021, 17:19 IST
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