Gross Domestic Knowledge Product (GDKP) and new initiatives of Government.

Why in the NEWS?

• The government wants to develop a framework to comprehensively understand the impact of knowledge on economic and social life in the country.

Key Points:

• Reviving an idea that was shelved in 2021, the government is looking to capture the knowledge economy as a metric to complement the gross domestic product (GDP).
• It intends to develop a framework to comprehensively capture the impact of knowledge on economic and social life in the country.

What will you read next in this topic?

1. Session organised by MoSPI:
2. Satellite Account:
3. Intellectual Property and Current Status:
4. Formation of Technical Committee:
5. Discussion on GDKP by NITI Aayog in 2021
6. Concerns of National Statistical Commission:
7. Relationship between GDKP and GDP:
8. Data availability and need for survey:

Session organised by MoSPI:

• On 10 February 2021, the Ministry of Statistics and Programme Implementation (MoSPI), Government of India organised a session chaired by Ajay Kumar Sood, Principal Scientific Adviser.
• The objective of the session was to discuss the “Conceptual Framework for Gross Domestic Knowledge Product (GDKP) Measurement”.
• In this session, Ajay Kumar Sood highlighted the importance of knowledge-centric parameters beyond traditional GDP as economic indicators.
• He also said that there is a need for a sophisticated methodology for GDKP to better understand the contribution of innovation, knowledge-driven sectors and intellectual assets to India’s economic growth.

Satellite Account:

• Saurabh Garg, Secretary, MoSPI informed that the session was organised to explore whether a satellite account can be prepared to measure the knowledge base of an economy.
• The satellite account measures various aspects of the economy in an alternative way. For example, MoSPI is already working on satellite accounts for sectors such as tourism, culture, oceans and blue economy.

Intellectual Property and Current Status:

• Currently, expenditure on intellectual property products (IPP) is recorded under Gross Fixed Capital Formation (GFCF), which is an indicator of capital investment for GDP.
• However, this method may be insufficient to fully reflect the knowledge economy, so a need has been felt to measure GDKP in a different way.
• This session discussed that it is very important to measure the knowledge economy properly, but for this a suitable formulation is required, which has not been available so far.
• Under this, not only knowledge based parameters will have to be identified, but some new parameters will also have to be developed considering this, which can reflect the overall situation properly.

Formation of Technical Committee:

• MoSPI announced that a technical committee will be formed to understand the measurement of GDKP and provide guidance on how to measure it accurately.
• This committee will help in the development of a consistent and authentic parameter for GDKP.

Discussion on GDKP by NITI Aayog in 2021

Presentation of Concept Note:

• In early 2021, NITI Aayog presented a concept note on Gross Domestic Knowledge Product (GDKP).
• The aim of this note was to consider the parameters of GDKP and understand how a knowledge-based economy can be measured.

Data Capture Problem: 

• NITI Aayog mentioned in this concept note that data capture for GDKP can be a challenging task. 
• As it is different from traditional economic indicators, there were no clear guidelines regarding the availability of data and the process of collection.

Ambiguity of Calculation Process: 

• The concept note also did not provide clarity on the process of calculating GDKP. 
• The note discusses how GDKP will be measured correctly, but did not mention specific methodologies or parameters for it.

Need for coordination with GDP: 

• NITI Aayog had also clarified that there was no clear direction on how GDKP would be coordinated with GDP. 
• While there was a plan to bring GDKP as a complement to GDP, it was not explained how the two indicators would work together and how each other’s contribution would be measured properly.

Refinement as required: 

• NITI Aayog acknowledged that the concept needed some refinement. 
• In particular, there is a need to identify the right parameters to measure GDKP and a coherent framework to implement it practically, which will be defined in detail in the coming days.

Concerns of National Statistical Commission:

• The National Statistical Commission also commented that it would not be easy to identify parameters for GDKP.
• This would require new parameters that are not only accurate but also clearly reflect the real situation.
• The Commission also pointed out that the concept of GDKP has more subjectivity, and needs further elaboration.

Relationship between GDKP and GDP:

• MoSPI clarified that GDKP will act as a complement to GDP.
• However, it is not yet clear how it will be integrated with GDP and whether it will help in measuring well-being.
• The objective of GDKP is to better measure and understand the contribution of knowledge-based activities to the Indian economy.
• There is a need to develop a proper methodology to integrate GDKP with GDP, so that the right synergy can be established between the two.
• This will ensure that both indicators complement each other and accurately measure all aspects of the Indian economy.

Data availability and need for survey:

• MoSPI also acknowledged that data for GDKP may not be readily available, as it is different from the traditional GDP dataset.
• This situation may require conducting perception-based surveys, which will help the government to implement this new parameter.