TAKING STOCK

How a long stock market boom has doomed India's — and America's — long-term competitiveness

- SHANKAR SHARMA

I am gliding through the IIT Madras campus. Black bucks laze around the woods that dominate the 650-acre campus. Their laziness is infectious. My mind begins wandering. Nehruji's vision created these magnificent campuses. The aim was to make India a tech powerhouse.

My lazy mind floats across to America. Nehruji's inspiration came from the American tech institutes. America built incredible tech from talent that emerged from those portals.

Pre-1980 was the most fecund era of American core tech innovation. And this golden era was driven primarily by government investment in research. Take a look:

• Nasa, Defense Advanced Research Projects Agency (DARPA), National Science Foundation (NSF), et al—catalysed by the Cold War and space race.

• The Manhattan Project and subsequent nuclear research, material sciences, etc. Again, state funded.

• In computer science, the development of the first programmable computers, Advanced Research Projects Agency Network, or Arpanet, (the precursor to the internet), and the foundations of artificial intelligence.

Of course, some corporate research labs in the mid-20th century (such as Bell Labs, Xerox PARC, IBM Research) made fundamental contributions to research.

But breakthrough tech continued to come largely from state funding or massive state business support, with involvement.

Even semiconductors, which came from the private sector, were supported usually by the demand for integrated circuits (ICs) from the military, Nasa, and DARPA.

But things started changing dramatically from 1982 onwards.

Reagan-era policies, in order to tighten the federal budget, reduced government R&D funding in favour of private sector-led research. And hence, things became more about applied research, and less about core scientific breakthroughs.