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Technology, Innovation, and R&D: A View of the Union Budget 2019

Technology can result in accrual of financial and political power, the so-called capital/knowledge owners versus the consumers (payers). At an extreme, technology hubs risk local gentrification, a challenge for land-scarce cities.

Rahul Tongia |

Updated:July 9, 2019, 3:19 PM IST
Technology, Innovation, and R&D: A View of the Union Budget 2019
(photo for representation, image: File photo)

If one has to elevate broader government objectives — human development, economic growth, demographics — technology is not first order but implicit as the means to achieving the broader objectives. Whether it’s new housing, employment or start-ups, all of these, directly or indirectly, rely on technology and innovation. Technology and innovation remains implicit instead of explicit. To quote, “We have to make both our cities and villages better using technology. This way we can help people live closer to their home, stop migration into cities, provide essential services to all.” An example cited was use of robotics to overcome manual scavenging.

A lot of thrust was given to connectivity, both physical as well as digital, but some of the schemes or plans lacked details. While roads have some budgetary numbers attached, digital networks like Bharat Net didn’t find any such specifics, at least not in the speech. More importantly, it’s not lack of money that’s always the bottleneck, but system design. Who finances or owns such infrastructure, how is it accessed or regulated, are all important questions going forward but, naturally, some of the aspects are outside a Finance Ministry’s purview. A subtle push was for lowering costs of digital transactions, which would help accelerate such payments.

Technology as an enabler was sprinkled throughout, including an India-wide travel card, which inherently needs lean and robust digital systems. In transportation, a focus on maintenance and operations for airplanes is a welcome push. Like the national power grid, there are other grids, like a gas grid, being spoken of.

The budget quietly made additional nods towards technology and innovation being an ecosystem, not something that can be created top-down. To that end, there were a slew of announcements on research, such as the National Research Foundation, or improvements to how start-ups are to be taxed (including the so-termed Angel Tax, and ability to carry-forward costs). Bulk procurement like done for LED bulbs would be extended for solar stoves and battery chargers. While this can help create volume, a lot of effort on these remains of quality products that fit consumer preferences – cooking is especially a social and behavioural issue, and many prior efforts in this space have failed because they treated this as an economic problem.

R&D institutions would be strengthened, to focus on key technology-related challenges across India. A focused program of online courses would focus on the digital divide faced by disadvantaged student communities. While a welcome step to filling a gap, it’s important to ask is the current gap one of relevant content (there’s a lot of content available online already) or one of access.

More than government per se – Universities also need to support academics doing more than “traditional” academia (teaching and research/publishing). This includes serving on committees, doing public-focused research (as opposed to merely “chasing the money”), and even enabling start-ups/entrepreneurship. It’s not easy, with a balancing act between potentially conflicting interests, but avoiding the conflicts through ignoring the issue isn’t the solution.

Coming to a few specifics, capitalising on India’s space prowess through a new Public Sector Enterprise, New Space India Limited (NSIL), under the Dept. of Space, is a new idea – similar attempts need to be undertaken in whatever public sector R&D there is.

A lot of focus was on electric vehicles, including taxpayer sops for loans undertaken. Some details were unclear, how interest might be capped over the life of the loan, but this can help demand. However, it’s unlikely this is the only missing ingredient to making EVs happen, and one has to be wary of subsidizing the rich. This is one reason the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme version II had a useful focus on public transportation, such as buses. Some specifics were a reduction to zero in import charges for selected parts exclusive for Electric Vehicles, such as the on-board charger or charging gun.

The budget focused on “Mega Investment in Sunrise and Advanced Technology Areas”, including silicon FABs for chips, solar PV cells, lithium storage batteries, etc. These are part of Make in India, but investors need not just policy support (or a market, which is already there) but improvements in cost of energy, supply-chain (logistics), and cost of capital.

There was a specific mention of lowering duties to zero on import of nuclear fuels and components for setting up a nuclear power plant. This is about as much financial help these can get, but are unlikely to be enough to drive new innovation or new players. Regulatory structures limit participation of the private sector, and global interest is stuck on issues of liability.

What didn’t the budget say? One of technology’s big challenges is one of equity. “High tech” is often niche, and many efficiency gains, especially automation and robotics, risk jobs. In some spaces, like ending danger or unsanitary jobs this is welcome, but in other cases, this is a tough call. Technology can result in accrual of financial and political power, the so-called capital/knowledge owners versus the consumers (payers). At an extreme, technology hubs risk local gentrification, a challenge for land-scarce cities.

The budget also didn’t focus enough on true innovation, especially risky innovation. Incremental innovation and process innovation improves the status quo, but we risk bad jugaad. Our national challenges need new ideas, some of which are bound to fail. We need to enable thousands of seeds across the country, only some of which will grow to become sustainable forests. Of course, budgets can only go so far in changing perceptions of risk.

Budget 2019 didn’t have so many surprises, especially not in the science, technology, and innovation space. While there were no radical shifts, there was a continuation or enhancement of a number of existing schemes and plans. A few thrust areas were spoken of, and some tweaks to taxation rates made, but budgets are rarely about any specific domain. The real work ahead will be in implementation.

(Dr. Rahul Tongia is a Fellow at Brookings India, focusing on Technology and Sustainable Development. All views are personal.)

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