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Ramchandra Kulkarni: For sustainable growth India needs to innovate

India needs to innovate if she wishes to sustain her progress without further incurring the penalties that non-inclusive, inequitable, undemocratic growth imposes on society and the environment.


India needs to innovate if she wishes to sustain her progress without further incurring the penalties that non-inclusive, inequitable, undemocratic growth imposes on society and the environment.  

In the 60th year of her independence from colonial rule India is emerging as an economy that merits attention and respect.

Although much progress has been made there still are problems of significant dimensions that India needs to address if she wishes to attain the developed nation status instead of being the perennial potential that never gets realized.

The challenge of inclusive growth 

It is not a coincidence that Prime Minister Manmohan Singh in his Independence Day speech reminded the nation that the dream of a free India will only be realized if, as Mahatma Gandhi said, we banish poverty from our midst. The thrust of the message was that the economic benefits accrued as a result of globalization should be inclusive, equitable, democratic and responsible.  

Similarly, the former President of India Dr. A.P.J. Abdul Kalam has been promoting with single-mindedness his vision for India by the year 2020. The foundation of his vision is based on actions aimed at providing Urban Amenities to people in Rural Areas. Aptly named PURA, these initiatives aim at bridging the Urban Rural divide and to the extent possible de-motivating people from relocating from rural to urban areas.

The broad challenge that both visions aim to overcome is to improve the quality of life of the vast majority of Indians who, despite the unprecedented growth, continue to live in poverty – the bottom of the pyramid so to speak. Without this, it is unlikely that India can sustain her present levels of growth and not incur the ever-increasing costs that negate growth.  

How does India organize herself and structure a response to this challenge? The government, perhaps under the influence of short-term pressures, will respond to this challenge by promoting subsidies and populist measures such as quotas. Such measures although well intentioned at best defer the problem and at their worst amplify existing ones and create new ones. Non-governmental organizations, as is their perspective, focus largely on social justice and related issues – relevant but not central to the issue of improving the quality of life at the bottom of the pyramid.  

Innovation as a response

In Finland, as also elsewhere, there has been much research done and published on the nature of innovation, innovation systems, and innovation environments. Research has firmly established that, without innovation and the capacity to renew, developed nations such as Finland will be unable to maintain an affluent society that is also competitive.

With innovation being so centrally identified with economic prosperity and social well-being it is natural to inquire – is innovation relevant to the Indian context? Before exploring this question I would like to briefly outline what I believe is implied by innovation.

Innovation starts with a thought, perhaps a problem or a need. Albert Einstein said “Innovation is not a product of logical thought, although the result is tied to logical structure.” The often unspoken goal of innovation seems to be to solve a problem, to overcome a challenge, or to fulfil a need. The attitude and energy that is involved is very different. The attitude is not that this is a difficult problem to solve so let us do some research and publish a paper but rather can we solve this problem and gain while doing it.

The attitude is of persisting, of defining success in meaningful parts, and of giving consideration to options that would conventionally be off-limits. It is a mindset that de-risks aspiration. It is an attitude that favours action. Innovators suffer from a sense of urgency that makes them bring the results of their effort to market much earlier than conventional wisdom would permit. The market forces then focus and refine the product or service to the desired levels. Thus the outcome of innovation is accelerated results that can change people’s lives.

It is this ability to accelerate results and bring changes to people’s lives that makes innovation such a powerful tool and one of immense relevance to India. 

Enterprise at the bottom of the pyramid

Prof. C.K. Prahalad in his book “Fortune at the Bottom of the Pyramid” suggests that it is the private sector that has the capacity as well as the opportunity to address the challenge of providing access to the benefits of globalization equitably – read “to the forgotten, to the underserved, to the bottom of the pyramid”. He makes the point that typically the people at the bottom of the pyramid are also poor and that the poor pay a penalty for being poor. In real terms these penalties translate into denial of access to information relevant to making informed choices and to world-class products and services. Prof. Prahalad shows how this basic inability to exercise consumer choice translates into a real squeeze in disposable income. Reducing the poverty penalty is thus seen as essential to raising real income, which then helps people out of poverty. Prof. Prahalad’s ideas are innovative and have merit.

The products that impose the severest penalty of non-consumption by the poor are in the sectors of healthcare, energy, nutrition, clean water, education, housing, finance and information connectivity. It is not a stretch then to recognize why Dr. Singh, Dr. Kalam and Prof. Prahalad all identify some or all of these sectors as strategic and in need of intervention in order to achieve broad-based economic prosperity and social welfare.

Is it possible to include those at the bottom of the pyramid in the production and distribution of products and services in the above-mentioned sectors? I would like to argue that it is and that innovation in these sectors is the way. At the bottom of the pyramid access to real opportunities to create wealth has the potential to transform lives in an inclusive way. In some sectors such innovation could also render some of the long-standing sector problems irrelevant.

Rural Electrification in India as an example

The long-standing goal of rural electrification in India has been plagued by the lack of infrastructure and, where infrastructure exists, by transmission and distributions (T&D) losses amounting at times to as much as 40%. Consequently schemes targeting 100% rural electrification have never met their targets. A massive injection of funds in building a new and efficient infrastructure is the option currently under consideration. Would this approach alleviate the rural electricity deficit even if the infrastructure could be built in time?

It is unlikely. T&D losses will continue to drive deficit. However, with the progress made in improving the generating efficiency of solar, wind, zero head micro-hydel and thermo-electric energy conversion technologies it is conceivable to envision a local-demand local-supply scenario that could overcome the deficit: an innovative technology-enabled response that bypasses and renders the T&D challenge irrelevant while continuing to focus on serving the energy needs of the rural consumer with affordable world-class services. The innovation would be the application of technologies that do not require massive capital outlays to generating electricity and in organizing the generation and supply of electricity at the local village level. Any generation over and above demand could be sold.

In India sectors such as healthcare, energy, nutrition, clean water, education, and housing, present early-stage high-value opportunities that are ripe for innovation. Ranked 2nd in the World Economic Forum’s Competitive Global Index Finland has demonstrated strengths in many of these sectors. Can India and Finland co-operate in mutually beneficial ways? I believe they can. Plenty of opportunities exist for innovative entrepreneurs from both countries.

Destiny and the hard work of the ordinary citizens of India have placed India firmly on a trajectory to achieve unimagined success. By continuing with the tired and tested do we in our developmental journey visit the same problems and challenges as the developed nations of today did or do we learn, innovate and leapfrog? It is up to Indians to choose whether we wish to traverse the path ahead as accidental tourists or as travellers with a sense of destiny and destination.

Ramchandra Kulkarni

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