Prof. P.V. Indiresan, (former Director of IIT, Madras) in his Dr. Y Nayudamma Memorial Lecture, delivered on 21 March 2003 under the auspices of the Adminstrative Staff College of India, explores the reasons for India lagging behind the West in technology and suggests some solutions to address this. He makes some very interesting points.
- Advances in knowledge and education are more important than money to a nation's growth. But "we are making the mistake of worshipping Lakshmi only to the total neglect of Saraswati"
- India can't follow the East-Asian model for growth which depends on increasing the inputs of labour and capital. We should follow the Western model which focusses on increasing the efficiency of utilization of those two inputs - through technology innovation.
According to Krugman, the East Asian Model is liable to get saturated on the labour front once the entire population is put to work. Similarly on the capital side, saturation will be the result when savings and foreign investment reach their peak. Further, as foreign investment is notoriously fickle, the risk is not merely saturation but instability - as witnessed already in all East Asian countries. In contrast, innovation-led development is relatively autonomous, and, hence, more stable. In particular, so long as a nation is building better and better mousetraps, there is little risk of shortage of customers!
- Indian culture is an impediment to technology development. Indiresan quotes a study by Mancur Olson Jr. (Big bills on the sidewalk: Why some countries are rich and others are poor. 1996) according to whom, basically, there can only be two reasons why some countries are rich and others are poor. The reason could either be differences in factor endowments (namely, land, labour, capital and technology), or differences in environment. Olson argues that it is not the factor endowments that has made rich countries rich, but the cultural environment (including political and social backgrounds)which is the crucial factor. This argument is based on the fact that neighbouring countries with similar endowments, the United States and Mexico, South and North Koreas, or erstwhile West and East Germany - differ widely in economic performance. Indiresan suggests that
after a foundation of capital-led growth, East Asian countries have turned to R&D and higher education for more growth. They are looking forward. We Indians have a tendency to look backward with longing to a pre-historic "Golden Age" of Ram Rajya. Nostalgia for our past glory is a cultural burden. It prevents us from modernising, from advancing knowledge in a scientific spirit.
- India lacks the scientific spirit and
innovation and technological progress are unlikely in a society in which people are intellectually malnourished, are superstitious, or are extremely traditional. In brief, what any country needs most is scientific spirit.
The iconoclasm that dominates Western science does not prevail in India. Indian scientists and engineers tend to cling to myths even after they cease to be useful. For instance, the Ambassador car is still ubiquitous in India. It started as the 1958 model of Morris Oxford. In forty years, the Ambassador car has not changed in essentials even though automobile technology has gone through several revolutions in the meanwhile. In Japan, Datsun procured the identical technology from Morris Motors and at the same time too. Unlike in India, Datsun adopted Western culture of science; it modified the received design step by step. It discarded the original design the moment it became obsolete. In the mean time, technology advances have been so substantial that the gap between the Ambassador and a modem car is unbridgeable. So, the company has gone shopping abroad once again for new technology. Such repetitive import is a bane of Indian technology. Datsun does not operate that way. It improves its designs continuously, in small but significant steps, and hence, is able to keep abreast of the cutting edge of technology.
Essentially, in India, once a technology is inducted, it hardly benefits from further improvement. It becomes static. For instance, the earliest missiles ever used in warfare was by Tippu Sultan. They did not perform well and were discarded. The British tried in depth, to improve upon it. incidentally, the only samples of Tippu's missiles are in the war museum in London, none in India. So, much for our reverence for the past!
- The swadeshi movement has missed the real point of "swadeshi" .
Mahatma Gandhi argued why India should import finished goods and export raw materials. He chose the example of cloth for the purpose, and launched the swadeshi movement. We overlook the fundamental principle Gandhiji espoused. Instead, we have clung to the idea that we should be content with handicrafts. Hence, swadeshi has come to be associated with low technology, and the underlying principle of self-reliance has all but been forgotten. While Appropriate Technology has its uses, it has its limitations too. For instance,
- A bullock cart cannot provide the same quantity or quality of service as a motorised vehicle.
- It does also pollute - relative to the quantity of service provided, its biological pollution is high, overall more polluting than a motor vehicle
- Relative to quantity of service, its capital/ running costs is high.
- It cannot generate high incomes
Indiresan quotes Robert Reich (from his book The Work of nations) to give an improved definition of self-reliance.
Reich makes a critical distinction between employees and owners. According to him, the labour force is always "Us" but the owners may or, may not be - even if they are citizens. According to Reich, the Corporation is "profoundly less relevant to economic future than the skills, the training and knowledge commanded by workers". He adds that control and ownership of corporations is NOT important. What is crucial is how much corporations invest in the future capability of the workers, and in R and D employing local scientists, engineers and technicians. A corporation, which invests in the training and upgrading of human capital, is "Ours" even if it is owned by foreigners; a corporation which does not invest in human capital is not "Ours" even if owned by our own citizens, even by the government.
Reich's emphasis is on human capital, as distinct from financial capital. The latter, he explains, is fluid; international capital movements are far simpler and easier than international movements of human capital. Unlike financial capital, which is footloose, human capital is relatively more stable. Further, as a rule, financial capital chases human capital - that is why so many software firms are coming to India. Or, if we have human capital, we need not worry about financial capital. The converse is not true. That makes skilled work force a more reliable asset than financial capital. Development based on human capital is dependable; that based on financial capital is undependable. As he says:
well-trained workers attract global corporations, which invest and give the workers good jobs; the good jobs, in turn, generate additional training and experience. As skills move upward and skill accumulates, a nation's citizens add more and more value to the world -- and command greater and greater compensation from the world, improving the country's standard of living.
Then, an Indian owned firm, even if it were a Public Sector Undertaking is NOT one of "ours"' if it is wedded to imported technology.
- A bullock cart cannot provide the same quantity or quality of service as a motorised vehicle.
- Indiresan contrasts the approaches of the social activitists (like the Narmada Bachao Andolan) with that of the technologists and looks at how both groups affect technological progress. He argues that the social activists have a negative outlook on progress with a penchant for status-quo, and the technologists have a positive outlook on progress and that the efforts of the technologists are likely to bring larger benefits over the longer term than that of the activists.
Without in any way belittling the concerns advocated by social activists, it must be stated that social activists do impede rational development. If ecologists had been active at the time Bhakra was being built, and most of Bilaspur town was submerged, that dam would never have been built, there would have been no Green Revolution, and millions would have perished of malnutrition if not by outright starvation. It is even debatable whether their ideas will bring prosperity even to the people whose cause they claim to espouse - they are more likely to perpetuate their present dismal poverty.
- Economies of scale is a more important factor in development than capital.
Evidently, the managerial ability to handle larger and larger systems is an important factor in economic growth. That is an area where India is indeed weak. Small scale industries get so many tax incentives and are allowed to evade so many taxes, that it is NOT profitable for them to expand to a globally competitive size. As a corollary, there is no incentive to invest in R&D and keep pace with global advances in technology. That is a double jeopardy - the country loses out both by poor technology and lack of economies of scale.
- The most important point that Indiresan makes is the damage inflicted by both Government and Industry to indigenous technology efforts, by their obsession with foreign technologies and their short-sighted approach to transfer of technologies from the laboratory to market.
Except where it is entirely unavoidable, Indian administrators (whether in the public or in the private sector) fear to try local designs. They consider that well-worn imported designs alone are risk free. For instance, it is the official policy in the Department of Telecommunications (and in others too) not to procure any equipment unless it has been used for a minimum of two years. As a result, Indian designs face a Catch-22 situation: They will not be accepted unless they have been in use, and they cannot be in use until they are tried out!
So, except when foreign technology is not available at all (as in defence, atomic energy and space), Indian designs do not get a chance to prove their worth . Private industry too is no different. They want swadeshi only for manufacturing operations but not for technology. In the bargain, predatory MNCs often trade on this weakness for imports and attempt to destroy any Indian technology that can prove a threat to their own hegemony. Such predatory tactics are not rare; they are, in fact, quite common. While it would be unfair to tar all foreign firms, it would be unwise not to protect the country from such threats.
Government technocrats (and Indian industrialists too) invariably go to a foreign manufacturer for production know-how. They obtain production equipment and production drawings but not the knowledge of how to design such systems. In particular, they do not go to any laboratory abroad to buy technology. They expect Indian laboratories to meet the kind of requirements, which abroad they can get only from manufacturers. In other words, Indian laboratories are expected to provide a kind of technological support, which is the normal domain of manufacturers only. Laboratories normally stop at the stage of technique development; several further steps need to be taken before any technique can be transformed into a manufacturable process. As neither the laboratory nor the Indian manufacturer is willing or able to fill these gaps, India boasts of few successes in transfer of technology from the laboratory to the market.
A peculiarity of technology is that, like vegetables, it must always be fresh; otherwise, it is unprofitable. If Indian manufacturers had attempted to improve their technology continuously, their technology needs would probably have been within the capability of the Indian scientific community. In any case, over a period of years, the needed expertise would have been built up. As Indian industrialists flog every know-how purchase to its death, there is a long time gap between technology renewals. So. the technology gap becomes too wide to bridge even if talented engineers are available. In other words, India offers little or no scope for Sam Pitrodas because she has little interest in improving on imported technology.
Indiresan attempts to go into the reasons for such a mindset in both Government and Industry
In India, when an official's work is evaluated, errors of commission and not errors of omission are questioned. There is no audit of opportunity costs - profits lost due to "risks not taken". Not surprisingly, under the circumstances, all officials model themselves on the lines of the Technology Checker, and scrupulously avoid getting entangled with uncertainties associated with being a Technology Acceptor. They play safe; will insist on every conceivable safeguard, and will set little value on the delay they cause, and yet get alarmed by any delay caused by the developer. Even if they have good intentions, they turn out to be difficult critics rather than supporters of indigenous technology. Thus, the Indian administrative system supports Technology Checkers only, rejects Technology Acceptors.
Suppose the Government (and industry too) were to institute a special cadre of Technology Acceptors. While a Technology Checker improves career prospects by minutely examining how departmental funds could be safeguarded (and hence, in what way the new technology may be faulted), the Technology Acceptor makes his career by attracting outside funds for inducting newer and newer technologies. In other words, while Technology Checker looks for zero risk even if that kills new technology, the Technology Acceptor nurtures new technologies even at the risk of failure and financial loss. The Technology Acceptor behaves like a mother towards new technology; the Technology Checker behaves like the proverbial mother-in-law.
and proposes an interesting solution.
Apart from Technology Acceptors, we need three other actors to complete the play:
- Manufacturer: More specifically, the capital goods manufacturer who develops manufacturing technology for designs developed in the laboratory. This cost is best met by the government out of a special fund, like the Technology Development Fund.
- Technology Acceptor: An official in the User Organisation whose career depends on inducting new technologies. The cost of proving and introducing new technologies in the market is better not borne not by the User but by a venture capitalist.
- Venture Capitalist: One who bears the financial risk of introducing the new technology and advances the cost of proving the new product in the field. If the product fails he bears the total loss, but makes it up because he is guaranteed large returns whenever it succeeds.
- Government Angel: An official of a science department of the government controlling a Technology Fund. He maintains a protective watch by (a) checking that no technology is slipping so far behind that it may not be locally updated, (b) motivating the Designer, the Manufacturer, the Banker and the User to co-operate with each other. That way he protects his Fund best.
Then, one may visualise a scenario of the following type:
- A change in an existing product is either proposed by the fabricator, or by a designer, or suggested by the User.
- The Government Angel sets up a development group in which the designer, the fabricator and the User are brought together. The Government Angel bears the cost of development.
- The Development group defines the objectives, the problems involved and the time frame.
- The designer designs jointly in collaboration with the fabricator. In turn, the fabricator constructs the prototype according to the specifications given by the User -who also tests and evaluates the product continuously as design proceeds. To ensure such co-operation, dose communication links are institutionalised.
- When the scheme reaches the prototype stage, and is considered technically promising by the user (and not necessarily usable directly) the Venture Capitalist evaluates the commercial viability of the project. If satisfied, the Venture Capitalist pays for full-scale prototype trials, and in sufficient intensity that the product may be brought into use in the quickest possible time.
- When the User is satisfied that the product is usable (even if that may not be perfect), trial manufacture is started, and the product is offered to User on no-risk basis on trial for, say, a one year period. The manufacturer is paid up-front by the Venture Capitalist, but the User pays only after one year, and that too if the product proves satisfactory with use. In that manner, the product gets a fair trial in the field, which makes it possible to remove teething problems. It is this last factor, removal of bugs, which are inevitable with any innovation, that is the greatest stumbling bloc for any innovation. The procedure suggested here removes this hurdle and eliminates the prime cause of infant mortality of indigenous technology.
- Once the product gets into the field, the development manager and the designer shift their attention to the next increment of technology. Then, the cycle starts all over again.
This scheme balances risks with prospects. It is likely to cut down the infant mortality of technology innovation from the current near hundred per cent level to a more reasonable figure. It calls for better technology management, not more money.
- Indiresan also makes a point about spurring rural development to bridge the gulf between the urban and rural areas which bring to mind the ideas of RISC (that Deesha is working on) and PURA (that President Kalam has been talking about).
A City with a 100,000 population generates more employment, and better-paid employment too, than a 100 villages with a population of a thousand each. The city is able to do so because it supports a large market, which villages cannot. The city supports a large market because the City Centre enjoys, primarily, high transport connectivity, and incidentally, high economic, electronic, and knowledge connectivities. Then, rural development will be effective only when it empowers villages to enjoy the same level of transport, economic, electronic and knowledge connectivity that cities enjoy. At the root is transport connectivity from which all development begins .
Consider linking a loop of villages by a ring road with frequent, high-speed bus services. That single transport link integrates the individual tiny markets of the villages on the loop, combines them into a single large one, as large as that of a small city. The ring can now support a variety of services that cities of similar size do. However, few of those services actually exist at the beginning. Businessmen will now see in the ring a large untapped market, and should be expected to come in. Hence, the gap between the potential future of the ring, and its current status, is a driving force for accelerated growth .
It can be shown that, topologically, the length of all infrastructure in a ring shaped habitat is half that of conventional urban designs. For that reason, the ring offers considerable savings in development costs. Apart from this economy, this design has several other advantages.
Because of its location in a rural area, land prices will be low. Both because of low land prices, and reduced length of infrastructure, a given quality of infrastructure will cost much less than in a city.
- In a conventional city, the market concentrates at the City Centre. Hence, busy hour traffic is one-way only. In the ring design, all points are equally well connected. Hence, there is a natural tendency for businesses to distribute all round the ring road instead of concentrating at a point. Therefore, busy hour traffic will move equally both ways, and gets halved.
- Further, on the ring, housing and business can be colocated. That way, daily commuting to work will be virtually eliminated. Thus, the demand for mass transportation, the most expensive component of urban life, is reduced appreciably.
- In conventional cities, the City Centre gets congested leading to high pollution, and rapid inflation of property prices. In the ring design, the market is distributed and not concentrated. Hence, no hot spot of congestion will develop; there will be little pollution, no structural inflation.
- The ring design lends itself also to water harvesting and water re-cycling. This too is a critical advantage because water supply has become a major financial and political problem in most cities.
The scheme envisages construction of a 40-60 km ring road (with a provision to expand ultimately to a multi-lane highway) linking a loop of villages - not too close, nor too far (say, not less than 30 km, nor more than 60 km), from a large city. A modem habitat will be planned for about 500 metres of space on either side of the ring road. Then, everybody will be within walking distance of the ring road; one single transport route will serve everyone.
I've excerpted a fair bit of the lecture here, but I'd still recommend reading the full text of Prof. Indiresan's lecture. Whether one agrees or not on all his ideas and suggestions, they're certainly worthy thinking about.