Innovation project funding at risk over World Bank rider

Innovation project funding at risk over World Bank rider

New Delhi: World Bank funding for India’s National Innovation Project, aimed at spurring innovation and financing start-ups, may be in jeopardy with the government objecting to a bid by the bank to link the aid to measures on climate change, Indian officials said.

The $180 million (around Rs870 crore) programme, announced in September 2007, was to get $165 million World Bank assistance.

Thirumalachari Ramasami, secretary in the department of science and technology—the government agency coordinating the project—confirmed that the project hadn’t yet started, but didn’t disclose the reasons for the delay.

The project to encourage innovation is crucial for India, which has dropped a substantial 18 places in the Global Innovation Index created by Soumitra Dutta, a professor at French business school Insead, in association with industry lobby Confederation of Indian Industry (CII). India, which ranked 23rd among 107 countries on the index in 2008, fell to 41 this year.

Three officials involved in the project said on condition of anonymity that the World Bank’s bid to attach conditions to the funding was a deal breaker. “Initially, the funding was to be broadbased, meant to fund a wide spectrum of early stage technologies. But then there was an attempt to connect it to action on climate change," said one of the officials. “That can’t work."

Discussions with India on the project were still on “on our entire pipeline of projects requested," and the bank was seeking to consolidate its programme, said Sudip Mozumder, city-based adviser, external affairs, for the World Bank.

“Therefore, we will be able to respond on the status of the National Innovation Project, after these discussions are finalized, which will be soon hopefully," he said, adding that climate change issues were “unlinked" from negotiations on the project.

Experts said the amount wasn’t large enough to allow the agency to armtwist the government. National Innovation Foundation director Anil Gupta said, “When these plans were initially discussed, it was conceived to encourage rural innovation, and several small innovators who otherwise find it hard to get funds. But narrowing it down to issues such as climate change would not benefit the country."

The bank still lists the project on its website but doesn’t mention the approval status. In the run-up to the climate change negotiations in Copenhagen in December, countries are negotiating greenhouse gas emission cut targets to cap the global increase in temperature at 2 degrees Celsius above pre-industrial-era levels.

India, which has refused to accept mandatory emission targets, insists on United Nations Framework Convention on Climate Change financing for adapting to climate change and technology transfer. “Agencies such as the World Bank can’t link climate change to their financing programmes. That’s against India’s stated position," said another government official who didn’t want to be identified.

Financing is a sticking point in international climate change talks. This sets out the amounts countries need to pay to mitigate climate change and how the funds should flow.

The government is set to table the National Innovation Bill in the next session of Parliament. The Bill is aimed at easier private investment flow into research and development.