Framing Policies to Catalyze Innovation

Author: Himanshu Ranjan

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Joe Dwyer of digintent defines innovation as 

“Innovation is the process of creating value by applying novel solutions to meaningful problems.”

There are four keywords in this definition – process, value creation, novel solutions, and meaningful problems. 

According to Jordan and Adelle, 2012

The policy process is normally conceptualized as sequential parts or stages. These are (1) problem emergence, (2) agenda setting, (3) consideration of policy options, (3) decision-making, (5) implementation, and (6) evaluation”

Thus, when the two terms innovation and policymaking are seen in combination one can find that innovation by definition forms an essential part of the policy-making process with an emphasis on common terms like enabling a ‘process’ and solving ‘problems’.

Prof. Rishikesha T. Krishnan, the director of IIM Bangalore highlights India’s top 10 innovations in the last decade (2011-2020). According to him, they are:

1. Vaccines such as Rotavac and Covaxin as safeguards against diarrhoea and covid-19
2. Aadhaar
3. UPI
4. TJ1400 (optical network solutions) by Tejas Networks 
5. Government eMarketplace (GeM)
6. Aspirational Districts Programme 
7. Mylab -test kits 
8. Saroglitazar – a medicine for the treatment of diabetic dyslipidemia developed by Zydus Cadila                        
9. Mangalyaan
10. Deep Tech Healthcare startups such as Niramai Thermalytix and 3 Nethra from Forus

One can’t miss the fact that many of these innovations are either science and technology interventions or policy innovations. The role of the government as an enabler and supporter of the ecosystem built around innovation is profound. 

For instance, the progress in the Aspirational Districts Programme is monitored by NITI Aayog’s Champions of Change dashboard. The GeM platform was launched by the Ministry of Commerce and Industry in August of 2016 and has already seen transactions of more than 1.93 lakh crores. From issuing the first unique identity number in September of 2010 to creating about 131.68 crores Aadhaar ids by October of 2021, Aadhaar has gained applications in e-KYC and helped filter out errors in DBT transactions. India Stack is a set of open APIs that delivers digital solutions of scale in identity, payments, and data. It is a non-profit think tank but its different components are owned and maintained by UIDAI, Ministry of Communications and Information Technology, MeitY, NPCI, and ReBIT. 

Mangalyaan is an important milestone in the journey of ISRO which comes under the department of space, GoI. Even Bharat Biotech received public grants for conducting healthcare trials and advanced orders for its vaccines. Similarly, the introduction of FASTags has reduced the queues near the tolls.

Thus, the proposition that innovation is fuelled by the private sector only is not true. However, it is essential that funding from the government also sustains private R&D such as in nations like South Korea as well as be supported by incentives such as tax credits. 

As the government introduced production-linked incentives, it is equally essential to introduce performance-based incentives.  This would enable the collective efforts of the employees to be directed towards delivering better work efficiency in a government setting. 

The government in its economic survey has advocated an agile approach towards policymaking based on bayesian updating of information. Similarly, there is a need to apply an incremental model of policy formulation so as to avoid sudden losses to the economy as seen in measures like demonetization and GST implementation. This would ensure momentum is not lost as well as systematic changes are gradually applied in a decentralized manner. Also, such measures would not attract widespread protests as seen in the recent protest by farmers against the three farm bills. 

External Push is also a factor. For example, if India signs international agreements and pledges to get rid of its social problems such as malnutrition, extreme poverty within a certain deadline, it would act as an enabler for higher budgets even to the subsequent governments. 

Compiling a Book of Innovations for government schemes such as MGNREGS and the interventions done could also act as a catalyst to increase the efficiency and potential of such schemes.

The extent of decentralization needs to be also evaluated and forms an important part of policy innovation. Researchers have shown that

 “a more decentralized federal system does not only lead to a higher average overall performance of policies, but it might also narrow down the dispersion of the expected overall performance of these policies” [Nicole J. Saam and Wolfgang Kerber (2013)]

With increasing productivity through technological solutions, generating employment for the vast number of the working-age population in India remains a challenge. Therefore, labour-intensive exports need a policy push. 

Max Weber’s work ‘The Protestant Ethic and the Spirit of Capitalism’ suggests that the religious ideas of a nation can also have an effect on its economy. Therefore, it’s essential to inculcate a spirit of innovation and entrepreneurship as well as notions of gender equality through a reformed education system

Therefore, incremental innovation in policymaking is the need of the hour. Decentralized institutional innovation enabled by higher budget allocations can bring about significant positive changes. Compiling a book of innovations in every domain can lead to the adoption of best practices. Innovation in labour-intensive exports can contribute towards solving the problem of unemployment to some extent. R&D tax credits as well as creating a dedicated ministry of innovation could be of help. External push factors, production & performance-linked incentives are rightly required. There is a need for increased public funding to fuel private R&D. Also, the education system needs to be reformed in order to create an entrepreneurial culture. A consideration of these points shall ensure that India unlocks its innovation potential, and adequate policy framing can act as the required catalyst for the same.

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