india innovation index 2020 implications for madhya pradesh
TRANSCRIPT
INDIA INNOVATION INDEX 2020: IMPLICATIONS FOR MADHYA PRADESH
Prepared By Anshumita Singh Tarunesh Umrao
Dr. Swati Chauhan (Center for Economic Sector)
Atal Bihari Vajpayee Institute of Good Governance and Policy Analysis (AIGGPA)
Innovation is the process of creation, development and implementation of a new product, process or
service with the aim of increasing the efficiency, effectiveness and competitive advantage. It in itself hints
at originality in building strong economies which will ensure a higher standard of living and better quality
of life. Innovation reflects the human ability to adapt and survive in fostering or adverse environments.
Modern technology, owing to the fourth industrial revolution and the globally intertwined nature of
nation-states, has revamped the sketch of operations and interactions significantly- having permeated
across various regions and socio-economic groups. Its spread has aided the fast materialization of ideas
and products. Preparation of a vaccine against coronavirus in a record time-span of 18-months being a
major illustration of how globalization and innovation through substantial exchange and creative
problem-solving have enabled businesses, societies and economies survive, evolve and sustain. This
ushering in of new ideas in material form drives social and economic transformation.
The vision of this nation to become a $5 trillion economy would significantly hinge on the innovation-
orientation towards economic development. The ambitious ‘Make in India’ and ‘Atmanirbhar Bharat’
schemes could prove to be strong ushers for economic empowerment. India has also aimed at enhancing
its research capacities by introducing the new Science, Technology, and Innovation Policy 2020.
Collectively, these will boost the production, research and innovative capacities of the country and
highlight it as an innovation-driven economy. The goal has been to make innovation a part of India’s policy
agenda, in order to develop and strengthen the existing innovation ecosystem that drives positive impact.
India quickly grappled and met the demands of the healthcare industries as the pandemic spread.
Innovation has been its savior in circumstances of drought, famines, and natural calamities much like the
coronavirus outbreak. Standing at the 30-year mark of the economic reforms of 1991, this milestone urges
one to question the way the spirit of innovation has been absorbed in the Indian economy. India enjoys a
crucial competitive advantage in the world, with its demographic dividend. 70% of its population is under
30 years of age which is higher than most developed nations. However, any progress largely depends on
how efficiently it leverages the potential of its working-class population and addresses the low labour
force participation rate (having the lowest female LFPR).
Innovation Index
The need to innovate is intrinsic for a robust economy in order to harbour the spirit of competition.
Economic growth is no longer defined merely through factors of production, but rather through aspects
that directly influenced them such as research and development, and human capital. Through the medium
of competition, different firms can utilize resources that have the power
to create value through new products.
The Global Innovation Index is a joint collaborative effort between the WIPO, Cornell University, and
INSEAD that annually ranks the innovation performance of more than 130 economies. India ranked 48th
in the GII as of 2020. Moreover, it ranks the highest amongst central and southern Asian countries and is
a new entrant to the Top 3 innovation economies among the lower-middle-income group nations with
Vietnam and Ukraine.
Enablers
Human Capital Investments Knowledge
Workers Business
Environment Safet and Legal Environment
Performance
Knowledge Output
Knowledge Diffusion
India Innovation Index Report
On the lines of such global indicators, Niti Aayog developed an Innovation index of a sub-national level in
2019. The India Innovation Index is the outcome of extensive research and analysis for evaluating India’s
innovation readiness. It seeks to provide a comprehensive framework for examining the nation’s internal
‘innovation-ecosystem’. This index identifies key areas for innovative development, provides an
understanding of the reasons behind differential regional performances along with the strengths and
weaknesses. It gives a view of the spatial dynamics of the same, and gives insights to states for achieving
the dual goal of social and economic development.
The index is tabulated based on globally considered parameters such as % of GDP spent on research and
development. The India Innovation Index measures innovation inputs through ‘Enablers’ and innovation
output as ‘Performance.’
Enabling Pillars include:
Performing pillars Include:
These pillars were selected considering the state of the Indian economy, for instance, the fact that India
is dominated by low-cost or frugal innovations, has been captured by incorporating the number of
grassroots innovations. The India Innovation Index intends to help in better understanding of a state’s
innovation ranking and relative performance.
It incorporates key indicators (described ahead) relating to seven pillars that can be used to understand
the performance of a state with regard to its innovation capabilities. The pillar performance rankings can
also serve to identify key areas where a state is under or over performing.
INDIA INNOVATION INDEX FRAMEWORK
Data Sources for Report
Information regarding these parameters has been taken from the report published at national level.
Government departments have also availed some information from the center. Confederation of Indian
Industry’s (CII) team of officials played a major role in collecting state-level data from departments in the
states including data from the departments of - industry, science and technology, technical education and
higher education.
In this Index, more weightage has been placed on the following parameters:
Information Technology and Intellectual property Act
Number of pending cases in the court
Knowledge intense employment
Foreign investment
Venture Capital deal
ICT exports
Status of Madhya Pradesh vis-à-vis Innovation Index
Madhya Pradesh has been placed as a major state in the Index, where out of the 17 states listed, it ranks
13th with a score of 20.72. It was placed 14th in the index of 2019. Madhya Pradesh’s 13th position is based
on enabling and performing indicators with a cumulative index score of 20.82– 2.58 points less than the
national average (23.4). Delhi (UT/City State) has the highest score of 46.6 followed by Karnataka (Major
State) having scored 42.5 points on the index. The Gross State Domestic Product of MP is ₹56,498.
The index takes into account indicators clustered under the pillars of enablers and performance. Each
dimension score is taken to be a simple average of its pillars. The rationale being the absence of any
theoretical or empirical proof to weigh any of the pillars higher than the others.
MP’s pillar-wise score has been represented in the table below:
Pillar MP’s Rank Among 17 States M.P. Score Mean Score of 17
Major States
Year 2019 2020 2020 2020
Human Capital 14 13 32.7 40.99
Investment 11 9 7.47 9.97
Knowledge Workers 10 10 8.36 12.20
Business Environment 12 13 14.79 21.07
Safety and Legal
Environment
13 4 63.66 53.61
Knowledge Output 14 11 13.74 18.17
Knowledge Diffusion 11 12 18.75 28.07
Within the pillars, the state has scored higher in the following 5 out of 36 parameters:
1. Higher Education and Teacher-Pupil Ratio
2. Colleges and Universities connected to NMEICT
3. Number of students enrolled in Engineering and Technology
4. Number of Incubator Centers
5. Percentage of Schools with ICT labs
Parameters with a low state score:
1. Common Facility Centers
2. Venture Capital Deals
3. Expenditure on Higher and Technical Education
4. ICT Exports
5. Number of Publications by Institutes
Detailed Performance Analysis: The cumulative ‘enabler’ score – an average of the five pillars including human capital, investment,
knowledge workers, business environment, safety and legal environment, was estimated as 25.4 for the
state. Whereas it’s ‘performance’ score- and of the knowledge produced and knowledge diffused was
comparatively lower, aggregated at 16.24. Both scores fall below the national average of 29 and 17.9,
which indicates that despite having significant potential, the state is unable to leverage its investments,
resources and infrastructure and translate it into successful innovation output. This is also highlighted by
the state’s efficiency ratio: a simple ratio of the scores of two pillar scores- which rounds up to 0.63 for
Madhya Pradesh.
The State scored the highest on the parameter of safety and legal environment (63.66) which exceeds
the national average where even the economically prosperous states are found lagging. The state seems
to be over performing on the aspect of pendency of court cases. However, the number and effectiveness
Performance Comparison
Investment
Knowledge Workers
Business Environment
Knowledge Diffusion
Performance
Knowledge Output
Index
Enabler
Human Capital
Safety and Legal Environment
0 10 20 30 40 50 60 70
MP score national score
of cyber-crime police stations can be improved. MP has also scored relatively better on human capital
(32.70), indicating decent investment in education, knowledge-based employment, etc. The state is over
performing on the ease of doing business.
Investment is a parameter with the lowest score for the country (10.9) as well as the state (7.47). MP’s
score falls much behind the national average- with a gap of 3.43 and the country’s best score (41.18) - a
gap of 33.71 points. This highlights the need to increase expenditure on higher and technical education,
increase venture capital deals and ways of attracting foreign direct investments into the state.
The score of performance parameters indicates that it has immense scope to build on and expand its
knowledge output and diffusion. Knowledge diffusion (18.75) in the state is represented more than the
knowledge output (13.74). The Knowledge Output in the country can be mainly attributed to new
business registrations, start-ups, publications, and grassroots innovation. This development is an outcome
of several business-friendly policies that have encouraged many to undertake new ventures. Number of
publications greatly influence this score. There is a vast difference between the country’s best
performance in knowledge output and MP’s performance- 69.08 points, which should be effectively
addressed through motivating and promoting a healthy start-up ecosystem.
Broad Areas for improving Madhya Pradesh’s Performance:
Madhya Pradesh needs to invest in its educational institutions with an aim to provide basic facilities and
access to technology. This might increase the score on Higher education institutions with an A or above
NAAC grade (currently 3.64). This will help improve the state’s human capital. Amplifying research and
development (especially private) and providing more space for the involvement of NGOs in knowledge-
intensive areas as well as knowledge-based employment will also improve the not only the human capital,
quality of knowledge workers, but will help in correspondingly increasing the knowledge output.
As per the innovation index report, state’s focus needs to be placed on venture capital deals, common
facility centres, research and development, quality of educational institutions, PhD. Programs, ICT,
grassroots innovation, expenditure on science and technology, design efficiency, and investing in its human
capital while efficiently leveraging, supporting and motivating it to derive high quality, innovative outputs
The report has elaborated on a few topics to improve the innovation ecosystem in the states at the end:
emphasizing primarily on promoting business clusters, incorporating best practices and innovations of
other states and focusing heavily on research.
Glossary of terms:
Human Capital Human capacities which determine the level of progress and innovation. It
depends upon the quality of education and scope for research and development.
Investments Funding- both private and public indicate the state’s overall scenario and its
expenditure on capacity building as well as R&D. It also gauges access to financial
institutions and support for ventures and expansions.
Knowledge
Workers
Level of business sophistication. Assessing their productivity, competitiveness,
and innovation potential through the quality and patterns of employment.
Business
Environment
Ease of doing business ranking, governmental technological adoption, factors
affecting private entrepreneurial endeavours and ability of the state to provide a
supportive environment for innovation.
Safety and Legal
Environment
Open and fair procedures, efficient market regulation, protection of property
rights, reducing regulation burdens.
Knowledge output Number of patents, articles published, etc. that reflects on the extent and quality
of research and development ultimately leading to creation of innovative
products.
Knowledge
diffusion
Hi-tech and manufacturing exports, commercialization of intellectual property,
handicraft, handloom and Geographical Indications sales in the states. This pillar
reflects the extent to which the state’s economy has grown from been resource
driven to innovation driven.