Last month, Karnataka topped the first-ever India Innovation Index brought out by Niti Aayog. At one level, this honour for the southern state and especially for its capital city — Bengaluru — was hardly surprising. For a while now, there’s been enough and more anecdotal evidence about how Karnataka laid the foundations of such distinction by investing in centres of academic and professional excellence such as the Indian Institute of Science as well as a slew of public sector engineering firms since independence.
Encouraged by the signs of a growing knowledge economy, Texas Instruments, the United States’ information technology company, set up a facility in the city in the late 1980s. Later on, this development spawned India’s own IT companies and, even more significantly, an entrepreneurial culture where starts-ups could come up and thrive.
The recognition in the India Innovation Index 2019 last month has underscored how information technology and start-up economy lie at the core of Karnataka’s emergence as the leader for innovation among all major states in the country.
The India Innovation Index 2019 measured innovation in the states through the prism of an enabling environment split under five broad categories — human capital, investment, knowledge workers, business environment, safety and legal environment, and two broad performance categories — knowledge output and knowledge diffusion.
What Karnataka does to excel
The central idea of the index was to understand which state provides the best enabling environment for innovation. Karnataka stands out because it has had a long history of investing in educational institutes that focus on achieving excellence. On two counts — venture capital deals, and Information and Communications Technology exports — it has scored 100 out of 100.
The index attempted to go beyond regular measures of assessing innovation through parameters such as the number of patents per million people, publication in scientific journals, Gross Domestic Product spending on Research & Development, high-tech manufacturing, and research personnel per one million population.
“The aim is to give states a robust measure of their innovative capacities and encourage them to strengthen the innovation ecosystem. This would also boost innovation-led entrepreneurship in India as a healthy innovation culture across states will help them attract hi-tech companies and start-ups,” says the scientist V K Saraswat, a member of the National Institute for Transforming India (or NITI) Aayog.
India’s overall score as a nation on the innovation index is 15.6. A large disparity exists between the human capital that is available in the country and the number of knowledge workers and this gap “suggests that the country has been unable to provide adequate research opportunities to its graduates and also indicates the quality of graduates,” said the Niti Aayog report.
Out of the 33 indicators, Karnataka scored 100 out of 100 on two parameters — venture capital deals and ICT exports — and this propelled the state to top the ranks. According to the innovation index, Karnataka has topped the ranks “due to the prevalence of numerous higher education institutions, research labs and a cluster of businesses that help drive businesses forward”. Although Karnataka is first among the major states with an innovation index of 35.65 points, if one also includes smaller states and UTs then Delhi comes up trumps with a score of 42.98.
In terms of the enabling environment for innovation — human capital, investment, knowledge workers, business environment and safety and legal environment — Karnataka is ranked third (with a score of 24.96), behind Maharashtra and Haryana.
Karnataka is best in terms of investments for innovation — scoring 100 for venture capital deals — but it ranks a lowly 15 in terms of creating safety and legal environment for innovation. The low ranking for safety and legal environment in states like Karnataka, Tamil Nadu and Telangana, despite these states ranking high for innovation, could be due to better reporting of crimes in these states, says the Niti Aayog report. One of the other innovation enabling parameters where Karnataka has done well is in the pupil-teacher ratio in higher education where the state has a recorded a score of 90 in the index.
In terms of innovation performance — knowledge output and knowledge diffusion — Karnataka tops the list of major states with a score of 46.35 compared to Tamil Nadu’s 42.40 and Maharashtra’s 34.22. Karnataka is also number one among all states in knowledge diffusion with a score of 67.06. The high knowledge diffusion score for Karnataka is a big reason behind the state contributing 40 per cent of the country’s information technology exports.
The higher innovation in Karnataka also leads to a higher competitiveness ranking for the state and innovation is also linked to higher per capita GDP, the Niti Aayog’s innovation index points out.
Among the areas for improvement outlined for Karnataka by the 2019 Innovation Index are increasing government expenditure on higher and technical education as well as science and technology; increasing number of NGOs in knowledge-intensive areas; increasing numbers of cyber cells and social media monitoring cells; improving grassroots innovations; increasing online transactions; strengthening information technology and patent laws and more ICT labs for schools.