Institutional Innovation for Sustainable Growth
As India is witnessing rapid economic transitions under a young demographic backdrop, the administrative systems are also witnessing a period of dynamic transition as Information Technology is improving last mile delivery and the efforts to catalyze Cooperative Federalism have been initiated through the Niti Aayog. It is evident that for the country to realize its vision of social and economic inclusion, we will have to streamline how both public and private institutions interact in a fast growing economy.
Theoretically, the concept of Institutional Innovation redefines roles and relationships across independent entities to accelerate and amplify learning and reduce risks, but it also creates the paradox of embedded agency. While a rigid institutional framework ensures operational integrity and service delivery for organizations, the same rigidity makes it difficult for these institutions to respond and adapt to external changes.
In the context of our governance system, Institutional Innovation refers to the ability of the our governance framework to not only adapt to external changes, but also enforce ‘disruptive’ mechanisms and technologies that alleviate the policy implementation bottlenecks arising out of the Centre-State interface and the mechanisms. A recent example of this behavior can be observed in Direct Benefit Transfer for LPG (DBTL) Scheme, where Aadhar was used as the disruptive technology to converge the Government Subsidy with Oil & Gas Companies and Banks to improve last mile delivery of gas subsidies.
‘Acute’ vs ‘Incubated’ Innovations
Acute innovations tend to occur quickly; they are dominated by individuals who are close to the locus of decision-making whereas incubated innovations take place slowly, frequently over many years. While the former, being more top driven, faces less partisan conflict, the latter is susceptible to be caught up in the partisan politics of multi stakeholder dynamics (William A. Galston, 2015).
The Catalyst for Last-mile Implementation
It is no secret that improving our implementation framework will go a long way in realizing our socio-economic goals. Without cooperation between the state and central machinery, or even institutions, departments and ministries under their respective jurisdiction, there will always be a dichotomy between planning and implementation. However, the emergence of new digital infrastructures and a global liberalization of economic policy have impacted the manner and efficacy of national and regional systems of innovation (Ryan Raffaelli).
Institutional Innovation has the ability to restructure the fundamental influences of the national education system, industrial relations, technical and scientific institutions, government policies, cultural traditions and many other national institutions. In recent times, digital technology has demonstrated disruptions in this established order that can shift institutional arrangements, power structures, relational interactions, and well-honed practices.
The use of ‘Governance’ can be distinguished in seven different uses of the concept of governance under different settings (Nallathiga, 2005)
- Corporate governance, relating to companies
- New Public Management, with its focus on ‘steering rather than rowing’
- ‘Good governance’, a reform agenda of multilaterals
- International interdependence generating new modes of governing
- ‘Socio-cybernetic system’, focusing on mechanism of coordination
- Way of governing through networks
The last concept of network governance aims to empower the on-ground institution to effectively link up with the policy and create a pool of ‘resource institutions’ that are reflexive towards localized solutions.
Institutional Innovation in India: A Journey Well Begun
The Green Revolution in the 1960s and the IT Revolution at the turn of the millennium have demonstrated that institutional innovations can have long term positive impacts upon the economy. However, we need more pragmatism to plug in the Policy-Innovation performance gap. According to The Global Innovation Index 2014, India has actually shown a decline trend which continued on the distress mode even after the global economic crisis.
However, with a dynamic government in place that is riding on the slogan of ‘minimum government, maximum governance’, and an optimistic startup environment, a brighter future for the Indian economy is on the horizon. The nation is experiencing a ‘creative awakening’, and institutional innovation will go a long way in fostering the spirit of ‘Young India’.