FAULTS IN OUR PAST

 See,when the Bombay plan was proposed we came to a agreement that the core sector investment will be made by public sector and in non core sector investment by private sector with the support of the government.But,India failed to capitalize because in 1970 and 1980,India's PSU,failed to modernize.The failure of Indian R&D to innovate to modernize can be traced back to Bombay Plan.

Because of Bombay plan,private sector has established a monopoly in non core sector and it was maintaining a monopoly in these non core sectors,and hence,private sector was not interested in making any investment in core sectors and on the other hand public sector suffered due to lack of autonomy,lack of manpower,lack of modernization by the government,which was result of inadequate investment which the government has made in education and health care.

So,due to deficiency of public sector and lack of interest of private sectors to invest in public sector(R&D),Indian innovation suffered in 1970 & 1980,and as a result the productivity and quality of Indian industry took a major hit.So,during this time India saw a time of low innovation and low productivity during this time.So,this was the time of third industrial revolution which India completely missed out.It was the time of Electronics,computers,mobiles,processors and we lost out entirely to other Asian economies due to the failure to invest in public sector investment(R&D)wing.Then came the era of LPG,and India's focus shifted to buying technology from rest of the world and this made India excessively reliant on external supply,especially critical technology.

The introduction of LPG reforms failed to modernize our PSU,and instead making them self reliant it made them dependent.As a result indigenous research and development suffered.So,post LPG reforms we saw that very few PSU invested in research and development , innovate and develop their own technology.The LPG reforms did allow the foreign companies to set foot in India and bring in much needed FDI,but there investment in R&D,does not account for indigenisation. As a result of these flawed policy in past,India has minimum investment in R&D,that is 1% of GDP.

If we compare with other Asian economies,such as Japan,South Korea,Hongkong,Taiwan and Singapore.They are completely self reliant with regard to critical technologies.So,back in 1970-80,these countries made sufficient investment in Public sector lead Research and Development.Over the years,these public sector have not only increased Public investment in Research and Development but they have also extended support to private R&D,and made them capable of relying on indigenous products.

China in 1970-80,when India was lagging behind,China followed the approach of countries such as Thailand,Malaysia and Indonesia as a hub for low end manufacturing,but late 1990,China clearly established itself as manufacturing power house and in this few years,China invested its focus and it has began making massive development,especially in critical area such as 5g,internet of things,AI,machine learning,Super computing etc.So,these things places China in comfortable position to lead the world towards fourth industrial revolution.