Context: 

Recently, National Accounts Division of the Ministry of Statistics and Programme Implementation (MoSPI) organised a half-day brainstorming session on “Conceptual Framework of Gross Domestic Knowledge Product (GDKP) Measurement.”

More on the news:

• GDPK was earlier discussed in 2021 when NITI Aayog presented a concept paper on it. 
• The National Statistical Commission had pointed out then that the concept note did not provide the methodology for capturing the data and computation of GDKP. 
• According to MoSPI also, GDKP fell short of specifying how it is going to supplement the GDP in measuring welfare. 

About GDKP:

GDKP aims to capture the economic impact of sectors driven by knowledge, such as innovation and intellectual assets.

This would work alongside the existing Gross Domestic Product (GDP) to give a better picture of how knowledge-based sectors contribute to overall economic growth.

The idea of GDKP was propounded by Prof. Umberto Sulpasso of the University of Southern California.

The Gross Domestic Knowledge Product (GDKP) measures a nation's growth and future through four basic pillars:

• Knowledge items (Ki) - identification of both modern and local distinct culture knowledge items in distinct categories.
• Country's Knowledge Producing Matrix (CKPM) - comparison of knowledge produced by government, private institutions, and households as a differentiated way to impact on the GDP.
• Country's Knowledge User Matrix (CKUM) – the value of knowledge bought by individuals and private companies as a way to measure their modernization efforts.
• Cost of Learning – similar to the cost of living to be used as a political reference for government budgeting decisions through education family bonds, education credit cards etc. to support young citizens.

Current Scenario regarding Measuring the contribution of knowledge in Indian Economy:

All expenditures on Intellectual Property Products (IPP) are currently recorded under GFCF, which serves as a key indicator of knowledge production.

• GFCF is an indicator for capital investments in the GDP dataset for the economy
• However, this doesn’t fully reflect the contribution of the knowledge economy.

The Ministry of Statistics (MoSPI) is considering creating a satellite account for the knowledge economy, similar to accounts used for sectors like tourism and culture.

• Satellite accounts give detailed insights into specific areas that GDP doesn’t cover well.

The government plans to set up a technical committee to assess and guide the development of the GDKP.

• The aim of it is to create a framework that accurately measures how knowledge sectors contribute to India’s economic growth.