Background

Knowledge plays a very critical role in economic development, measurement of domestic knowledge items would provide us with insights into the knowledge structure of an economy, which in turn would help define knowledge policy to steer national economic development to solve the varied socio-economic problems facing the nation. Moreover, India is currently evolving strategies to capitalize on its demographic dividend to make it a developed economy by 2047. Knowledge will play a critical catalytic role in this transition. Thus, quantification of the contribution of these knowledge items/products in the national GDP assumes vital significance.

The Gross Domestic Product of a nation measures the total output of goods and services, the impact of Knowledge creation and its dissemination in economic growth does not get effectively captured as GDP metric is not conceptualized to provide that information. GDP was intended to measure economic activity and thus facets of knowledge embedded in the activities are not given its due prominence.

Gross Domestic Knowledge Product (GDKP)

In recent times, the economy is driven mainly by knowledge products in the field of cyber space which has novel mechanism of production & dissemination. Knowledge in the Cyber space under the aegis of 5KR (the Fifth KNOWLEDGE REVOLUTION) is the basis of the GDKP and the new statistical structural data that is needed to provide a push to traditional GDP. The GDKP envisages the measurement of value of knowledge creation and value addition through the distribution channels. It involves identification of the knowledge creators, distributors, knowledge enhancers and establishing boundaries so that they are quantifiable/measurable project will begin with certain in the sectors like ICT, scientific research, agriculture, education etc.

Gross Domestic Knowledge Product (GDKP) is a concept that measures the economic value of a country's knowledge production and use. It is an alternative or complementary metric to GDP, focusing on the contribution of knowledge-intensive sectors, innovation, research, education, and technology to the economy. Broadly, there are four aspects of knowledge in an economy - the knowledge items, the knowledge producers, the knowledge distributors, and knowledge users (consumers and enhancers). Knowledge items are typically either intangible or tangible. The intangible ones are items like on-line school and university courses, radio and TV programmes, professional training courses, web-based courses, patent production, etc. The tangible items include books, journals, magazines, digital storage, computers, cell-phones, smart TVs, etc. Unlike other material goods, a particular piece of knowledge once produced, can be replicated/consumed unlimited number of times and its value may get enhanced if there is a net addition to the knowledge already acquired. Thus, the value of production of a particular knowledge item (say Ki) needs to be multiplied by the number of consumers to whom it has been distributed to ascertain the associated distribution costs through all measurable channels.

Examples in Agriculture

• High-Yielding Crop Varieties: Pusa Basmati 1121 (Developed by IARI in 2003) and Pusa Basmati 1509 (Released by IARI in 2013)

GDKP of this product can be measured by Additional yield multiplied by market price and Export earnings from basmati rice exports.

• The PUSA STFR (Soil Testing and Fertilizer Recommendation) is a technology developed by the Indian Agricultural Research Institute (IARI) to assist farmers in improving soil health and optimizing fertilizer use. They made available to private manufacturers through a licensing agreement. Manufacturers ensure scalability and cost-effective production to make the device affordable for farmers. It distributed through agro-dealer networks, cooperative societies, and government agencies.

Current Practice

Ministry of Statistics and Programme Implementation releases estimates of Gross Fixed Capital Formation (GFCF) of various assets (i. Dwellings and other Buildings Structures, ii. Machinery and Equipment, iii. Intellectual Property Products, iv. Cultivated Biological Resources etc.) for each institutional sector of the economy in accordance with the System of National Accounts (SNA 2008).

All expenditures on Intellectual Property Products (IPP) are recorded as GFCF, if they are expected to provide economic benefits for the owner. Intellectual property products are the result of research, development, investigation or innovation leading to knowledge that the developers can market or use to their own benefit in production because use of the knowledge is restricted by means of legal or other protection (SNA 2008, para 10.98). Intellectual property products include following categories of assets: i. Research and Development ii. Mineral exploration and Evaluation, iii. Computer software and Databases, iv. Entertainment, Literary or Artistic Originals, v. Other Intellectual Property Products.

Data Sources

Data Sources employed in compilation of estimates of IPP for each of the institutional sectors are given below:

Institutional Sector wise IPP across industries for FY 2022-23 is given in Annexure.

Source: NAS 2024, MoSPI (Tables 7.3, 7.3 A, 7.3 B, 7.3 C)

Note: Public Sector includes General Government, Departmental and Non-departmental Enterprises.