Here’s how fiscal prudence could foster India’s emergence as an innovation-driven economy

First, on just a one-year horizon, the debt-R&D channel is not statistically significant. This mirrors Sever’s own finding that emerging markets as a group show no short-run sensitivity. There can be structural reasons for this. Indian manufacturing firms in chemicals, pharmaceuticals and capital goods have faced several other constraints; these could relate to infrastructure, intellectual property enforcement or talent availability. They dominate policy uncertainty in the short run.