Mister Miser Minister

Arun has covered the IT industry in India since the time 80386 was cutting edge, MS DOS was the predominant desktop OS, and Internet was still a few years away. Follow him on twitter @aruntm

Instead of providing a token amount as a goodwill gesture, it might have been better not to allocate anything at all.

If you pay peanuts, you get monkeys. So goes an old saying. And it holds true even today. This is why the best talents in the market—yes, talents not monkeys—are handsomely paid, and really innovative ideas are backed with solid money.

Alas, someone forgot to mention this to our beloved Chanakya, India’s Finance Minister P. Chidambaram. So, in his recent budget speech, he allocated a ‘grand’ sum of Rs 200 crore to take some amazing innovations in science and technology to the market.

In his budget speech last month, Chidambaram said: “While we extol the virtues of science and technology, I think we do not pay enough attention to science and technology for the common man. (Of course, we don’t. Tell us something new, please). With the help of the Ministry of Science and Technology and the Principal Scientific Advisor to the Government, I have identified a few amazing S&T innovations. (Wow! How interesting. Can we know what these amazing innovations are?) I propose to set apart Rs 200 crore to fund organizations that will scale up and make these products available to the people. (Gee, thanks!) I propose to ask the National Innovation Council to formulate a scheme for the management and application of the fund.”

Apart from the fact that the funds will be spent in a complex manner—imagine asking a body to come up with a scheme, which will manage how the funds are spent—the allocation of a ‘princely’ sum of Rs 200 crore is truly baffling.

While many people would say that Rs 200 crore is not a small amount—which, admittedly, it isn’t when looked at in isolation—it starts appearing small when one looks at the intent for which it is set aside. Anyone would realize that allocation of funds must be commensurate with the purpose.

So, what can one really achieve with Rs 200 crore these days? Look at it this way. It took Rs 50 crore to produce the Salman Khan starrer Dabangg 2 and this reportedly doesn’t include Salman Khan’s fees. The Salman Khan-Katrina Kaif starrer Ek Tha Tiger cost Rs 75 crore to make and its producers spent an additional Rs 15 crore on just promotions and advertising. Even three years ago, it took an estimated Rs 45 crore to produce the Aamir Khan starrer 3 Idiots. To put it another way, with Rs 200 crore one can get about three Salman Khan movies!

But, one can always argue that technology innovations and—taking them to market—are way different from producing Bollywood movies. So, the two, in a sense, are not comparable. Alright, argument accepted. Let’s look at it slightly differently.

Even before Google was incorporated as a company, it received a seed funding of $100,000 (about Rs 55 lakh) and within a year, it had raised $25 million (Rs 137 crore) from venture capital firms Kleiner Perkins Caufield & Byers and Sequoia Capital.

Google wasn’t an exception. Facebook got $600,000 (about Rs 330 lakh) from angel investors, including Peter Thiel of PayPal fame, when it was barely more than an idea. And it subsequently raised $12.7 million (about Rs 70 crore) in venture funding from Accel Partners and others. And there are many other similar stories.

Look at the similarities. These companies received funding to take just one idea or innovation to market. And they were able to raise a substantial amount. So, investors were—and still are—willing to part with sizeable chunks of money to back ideas or innovations. This also means that a substantial amount of investment is required to take an innovation to market.

Contrast this with the announcements of Chidambaram—a mere Rs 200 crore to scale up the few identified or short-listed innovations and “make them available to the people”. Throwing peanuts and expecting great results in return.

Perhaps, Chidambaram was compelled to allocate a part of the budget for innovation in science and technology. However, instead of providing a token amount as a goodwill gesture, it might have been better not to allocate anything at all.

Better still, if the government and Chidambaram were really keen on further developing these innovations and making them available to people, perhaps it might have been better to have made them available to anyone free of cost. And if any of these were good innovations, surely someone would have spotted an opportunity and backed it with some real money.

A half-baked effort like this will not yield any great result.