Explained: Why Karnataka Is India’s Most Innovative State 

Explained: Why Karnataka Is India’s Most Innovative State A screenshot from NITI Aayog’s report on India Innovation Index 2020 released recently (Source: https://niti.gov.in/sites/default/files/2021-01/IndiaInnovationReport2020Book.pdf)

The second edition of the NITI Aayog’s India Innovation Index 2020 is out. Southern states have topped the charts with flying colours.

Kerala moved up a notch to the fifth spot. Telangana occupies the fourth spot, while Maharashtra pipped Tamil Nadu to the second spot. Karnataka has topped for the second time in a row. They were followed by Haryana, Andhra Pradesh, Gujarat, Uttar Pradesh and Punjab in that order.

Outside the ‘Major States’ category, Delhi retained its top spot. Chandigarh landed in the second place this year.

Under the ‘North-Eastern/Hill States’ category, Himachal Pradesh moved up from the second position to emerge as the top ranker this year, while 2019’s top performer (in this category), Sikkim, slipped down to the fourth position.

(Source: https://niti.gov.in/sites/default/files/2021-01/IndiaInnovationReport2020Book.pdf)
(Source: https://niti.gov.in/sites/default/files/2021-01/IndiaInnovationReport2020Book.pdf)
(Source: https://niti.gov.in/sites/default/files/2021-01/IndiaInnovationReport2020Book.pdf)
(Source: https://niti.gov.in/sites/default/files/2021-01/IndiaInnovationReport2020Book.pdf)

About the Index

NITI Aayog, along with the Institute for Competitiveness, today released the second edition of the India Innovation Index.

The innovation inputs were measured through five enabler parameters:

  • Human Capital
  • Investment
  • Knowledge Workers
  • Business Environment
  • Safety and Legal Environment

Two outcome parameters were also used:

  • Knowledge Output
  • Knowledge Diffusion

Why Karnataka tops

Karnataka ranks first in performance indicators and third in enablers.

It ranks first in Investment, third in Human Capital, second in Knowledge Workers and eighth in Business Environment. In Safety and Legal Environment, Karnataka ranks 16th. In Knowledge Output and Knowledge Diffusion, Karnataka ranks third and first respectively. Its score is exceptionally high in the latter - 20 percentage points higher than the second place holder Tamil Nadu - which gives it an overall lead.

Karnataka scored in the NITI Aayog’s India Innovation Index (Source: https://niti.gov.in/sites/default/files/2021-01/IndiaInnovationReport2020Book.pdf)
Karnataka scored in the NITI Aayog’s India Innovation Index (Source: https://niti.gov.in/sites/default/files/2021-01/IndiaInnovationReport2020Book.pdf)

Karnataka’s rank is attributable to its substantive number of venture capital deals, registered geographical indicators and information and communications technology (ICT) exports. Karnataka’s high Foreign Direct Investment (FDI) inflow has also enhanced the innovation capabilities of the state, the NITI Aayog report states.

Karnataka scores a full 100 on the following: Geographical indicators, ICT exports, venture capital deals; and above 90 on pupil teacher ratio in higher education, and National Assessment Score (Class X).

Karnataka overperformed (relative to GDP and population) in private as well as state funded research and development (R&D) units, however, scored below 50. The state government also needs to increase its expenditure on R&D.

The report also clarifies that Karnataka has a long way to go with regards to improving its business environment and safety and legal environment. Karnataka performs poorly in ease of doing business, online service transactions, internet subscribers, incubator centres.

According to the report, Karnataka underperforms in grassroots innovation, trademark and industrial design applications, and even presence of startups and new businesses registered for its population and GDP.

Karnataka also needs to improve its high tech and medium high tech manufacturing industries.

(Source: https://niti.gov.in/sites/default/files/2021-01/IndiaInnovationReport2020Book.pdf)
(Source: https://niti.gov.in/sites/default/files/2021-01/IndiaInnovationReport2020Book.pdf)

What can states do?

All the states can learn from others on some indicators while be a role model for others on certain others. As we saw above, Karnataka, the top ranker, also has a long way to go regarding some indicators. Chandigarh, on the other hand, has outperformed the other states in four indicators of Human Capital, Knowledge Workers and Safety and Legal Environment, but has underperformed in Knowledge Diffusion.

The low performing states need to pay special attention to knowledge diffusion, knowledge output, investment, business environment.

The index can be used as an actionable tool for policymakers to recognize challenges and address them.

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