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Business News/ Opinion / A new palette for policy

A new palette for policy

NITI Aayog was established to displace planning and not just replace the Planning Commission

A file photo of Tarun Khanna. Photo: Mint Premium
A file photo of Tarun Khanna. Photo: Mint

Last week when I read that the Tarun Khanna-led committee on innovation and entrepreneurship set up by NITI Aayog would be meeting soon ((mintne.ws/1JQDYbE), my first reaction was “oh well". Then, it turned into frustration and disappointment. The reaction was due to the composition of the committee and not with the individuals. I do not know most of them personally, except for Manish Sabharwal. Had the same composition been announced with different personalities, my reaction would have been the same. A committee to look into innovation and entrepreneurship has three academics—one of them from overseas and two from the services industry. To the best of my knowledge, there is no one from the field who has actually innovated and tried to convert it into an enterprise.

In the first years of the new millennium, some of us formed the Aavishkaar India Micro Venture Capital Fund. It was meant precisely to fund innovative ideas that had relevance for rural India. I was one of the co-founders.

Today, Aavishkaar is a leading Indian venture capital firm in the jargonized world of impact investing. Some of the ventures that the fund and subsequent funds of Aavishkaar supported are truly innovative. Servals Automation came up with a fuel-efficient kerosene burner. There is Vortex that made low-cost ATMs with tremendous export potential. It was incubated in an Indian technology school and was converted to an enterprise in India with Indian entrepreneurs. There is Milk Mantra—one of the rare enterprises from Odisha that is making waves.

After Aavishkaar came Seed Fund. My best guess is that Seed Fund and Aavishkaar are the only homegrown funds supporting innovation and entrepreneurship that this committee is supposed to be looking into. At the risk of the too-obvious charge of conflict of interest, I state that not many in the country understand both innovation and entrepreneurship better than Pravin Gandhi of Seed Fund and Vineet Rai of Aavishkaar.

Apart from the above ongoing success stories, much more valuable innovations and lessons lie buried in the enterprises that failed to take off as commercial enterprises. For example, talk to professors Vinay and Swami Manohar who set up PicoPeta to manufacture Simputer—listed as one of the seven truly exciting innovations in MIT Technology Review. It was ahead of its time and it failed as a commercial enterprise. Their experience will be more useful to the government’s policy design than the report of a committee comprising academics with administrative responsibilities. It is one thing for this committee to speak to these folks and another thing to give them a direct role in the committee’s work and recommendations. The feel—the passion—will be missing. The committee is supposed to meet with incubators, start-up funds and enterprises for two days. That cannot be anything but superficial.

On the conceptual plane too, appointing a committee on innovation and entrepreneurship strikes me as rather odd. The government creates an enabling environment, if at all. In fact, in India, innovation has happened precisely because the Union government and governments at all levels had not created any enabling environment. So, if it wants to help in the natural and spontaneous emergence of a culture of innovation, entrepreneurship and their scaling-up, it has to address the issues of fragmented agriculture (land) and labour.

Most of the production-side reforms are in the realm of state governments and governments further below. Committees have to go across states, talk to small and medium-sized enterprise associations, listen to their success stories (few) and failures (many), document the lessons and compile the policy issues that they throw up.

More often, members of committees who have other commitments read the report only when they have to sign off on it. I am reminded of the report submitted by the Financial Sector Legislative Reforms Commission in which almost all the committee members had taken exception to one or more of the substantive recommendations of the commission. Such dissents raise big questions on the credibility and usefulness of reports. The exercise is largely a waste of taxpayers’ money.

As Shankkar Aiyar wrote recently, there needs to be a commission to inquire into all the committees that governments in India—Union and states—have appointed since Independence and prepare a report on the “Actions Taken" on them and thus evaluate their effectiveness versus the expenditure incurred by these commissions. Much wisdom probably remains trapped in the hundreds of reports prepared by previously appointed committees.

NITI Aayog will be sending a big signal that it is indeed a New Initiative to Transform India if it decides that it would not appoint any new committee but would create a compendium of reports submitted by all committees appointed in the last 25 years, look into them, examine their recommendations and their relevance and re-submit them to the respective government (Union or state)—for implementation. NITI Aayog was meant to displace planning and not just replace the commission.

V. Anantha Nageswaran is co-founder of Aavishkaar Venture Fund and Takshashila Institution.

Comments are welcome at baretalk@livemint.com. To read V. Anantha Nageswaran’s previous columns, go to www.livemint.com/baretalk

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Published: 22 Jun 2015, 05:44 PM IST
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