India needs rural innovations for boosting economy: study

Overall, India's strong pool of skilled, English-speaking graduates would aid in expansion of the country's services sector, says report

By Rajit Sengupta
Published: Monday 15 September 2014

India is ranked 14th among 24 countries in the creative productivity index (CPI), highlighting the need for further investments in physical infrastructure and human capital, according to a report by the Asian Development Bank (ADB) and Economist Intelligence Unit released on Friday.

The report, Innovative Asia: Advancing the Knowledge-based Economy, ranks Japan and the Republic of Korea as countries most efficient in the Asia and Pacific region at turning creative inputs into tangible innovation. Myanmar, Pakistan, and Cambodia, by contrast, are ranked as the least efficient innovators.

It says that despite recent productivity gains, India still lags behind in terms of output because of low agriculture productivity. This indicates the need for rural innovations, the report says. 

“By leveraging its strengths in human capital and ICT (information and communications technology) services, India can become a major global knowledge-based economy,” said Bindu N Lohani, ADB Vice-President for Knowledge Management and Sustainable Development. “But making this a reality will require many steps like putting in place supportive laws, improving infrastructure, dismantling barriers to trade and investment, upskilling the labour force, boosting research and development spending, and providing innovative financing options for small businesses and entrepreneurs.”

The report also highlights several challenges, including labour laws, lower rate of urbanisation considering the years of schooling, and technical and vocational enrolment of students in secondary school. 

ADB also highlights “considerable barriers to doing business and high tariffs impeding trade” in India in another study on knowledge-based economy.  “The limited trade diversification in terms of both a narrow export basket and geographic trade partners has constrained progress in international markets,” says ADB in the study. 

India has built pockets of knowledge-based growth, but has not yet translated this into a broader economic model, says the report. 

Overall, India’s solid pool of skilled, English-speaking graduates would aid in expansion of the country’s services sector, says the report.  

Report highlights
  1. Asia is expected to be the fastest-growing consumer market over the next decade
  2. By 2015, 40 countries, including India and Indonesia, will have more people with mobile device access than electricity at home
  3. In 2011, information and communications technology (ICT) accounted for nearly a quarter of developing Asia’s exports, over twice the global average
  4. An educated, skilled workforce is crucial for a knowledge economy but by 2020 in Asia, it is estimated there will be a shortage of 38 million-40 million highly skilled (college educated) workers, a shortage of 45 million medium-skilled (secondary education) workers and a surplus of 90 million-95 million low skilled workers
  5. Hong Kong, China and India were among the top 10 exporters of creative goods in 2008, accounting for over 30 per cent of total global exports
Source: Innovative Asia: Advancing the Knowledge-Based Economy

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