India needs sector-wise accounts to measure knowledge economy: MoSPI panel | Economy & Policy News

India should distribute the task of measuring its knowledge economy among sectoral ministries, state governments and research institutions, the Committee on Knowledge Systems, constituted by the Ministry of Statistics and Programme Implementation (MoSPI), recommended on Friday.

 

It proposed a federated model for developing dedicated accounts for areas ranging from artificial intelligence (AI) systems and data to research and development (R&D) and human capital.

 

In its policy paper, titled Framework for Measuring the Contribution of Knowledge and Knowledge Products to the Economy, the committee called for a set of thematic accounts aligned with the System of National Accounts (SNA) 2025, rather than a single aggregate measure of the entire knowledge ecosystem. This, it said, would facilitate better policymaking.

  

The committee identified seven priority areas: human capital, R&D, the creative economy, AI systems, data and databases, high-tech products and frontier technologies, and the digital economy. It recommended that India begin with three of these areas.

 

“Understanding the contribution of knowledge to the economy is therefore essential for identifying existing strengths, recognising capability gaps and setting priorities to guide India’s future development,” the ministry said in a statement.

 

The policy paper outlined eight interrelated components of the knowledge ecosystem: knowledge, capabilities and assets, enabling infrastructure, knowledge creation activities, knowledge products, knowledge-embedded products, knowledge-intensive entrepreneurship and knowledge application.

 

It also proposed five boundary conditions for identifying knowledge products: knowledge as an input, knowledge content, identifiability, codification and economic value.

 

The committee clarified that these are broad guiding principles, not rigid criteria, allowing sufficient flexibility to accommodate the diversity and evolving nature of knowledge products.

 

Under the proposed federated model, three categories of institutions would have distinct roles. System integrators would establish the common framework, while domain institutions, including sectoral ministries and departments, would measure specialised components. State governments, regulatory bodies and research institutions would act as key partners, contributing data, pilot projects and studies.

 

States would play a particularly important role because many knowledge-based products, such as Darjeeling tea and Kancheepuram silk, are closely tied to specific geographical locations.

 

“States may therefore be treated not merely as data suppliers, but as institutional partners in identifying, measuring and validating geographically distributed knowledge capabilities, activities and products,” the paper said.

 

The committee argued that conventional official statistics fail to capture much of the economic contribution of knowledge. Knowledge is embedded in people, firms, capital and products, and cuts across conventional industry classifications.

 

“Knowledge contributes to growth through many channels, but much of that contribution is invisible in the national accounts,” the paper said.

 

The committee cautioned against attempting to measure the entire knowledge ecosystem at once, arguing that the exercise would need to be phased.

 

“It would be infeasible to attempt to develop comprehensive measurement of all components of the knowledge ecosystem simultaneously,” the paper said.

 

It proposed prioritising areas based on four considerations: their contribution to economic growth, their contribution to inclusion, their future significance, including the impact of AI, and the feasibility of measurement at a reasonable cost.

 

The growing capabilities of AI have added urgency to the exercise. MoSPI said measurement was becoming more complex because powerful AI systems were generating knowledge in ways that went beyond conventional human knowledge creation.

 

The paper also highlighted the strategic implications of AI, particularly its growing application in defence, which could alter the balance of power among nations.

 

“The implementation of such a framework for tracking knowledge capabilities is thus essential to India’s long-term national security,” the paper said.