The Indian Economy Blog

February 2, 2008

India’s Space Program – An Economy Perspective

Filed under: Energy,Infrastructure,Politics,Science and Technology — Kiran @ 5:28 am

The economic benefits of a space program are a continuous source of debate. In India there is the constant suggestion that the thousands of crores spent on ISRO’s adventures should be utilized elsewhere. Here are some thoughts on why a space program makes economic sense.

Everyone knows that a space program offers great advantages from a defense perspective – think satellite reconnaissance, rockets and missiles. Since defense is the primary function of a government, that by itself should justify investments in space. There are political benefits too. Every achievement in the space arena increases the prestige of the nation internationally. More important is the pride the citizens feel as this promotes solidarity and national identity. For the sake of an economic argument though, we should keep defense and political considerations aside. So the question boils down to this: does the pursuit of economic security mandate investment into a space program?

In the short run: Spin-off Benefits

A space program generally involves the development of cutting edge technologies. Even if something has been done before, and particularly if it has been done before, it can be done in a more efficient manner. Till 2005 ISRO had received 150 patents (not all international) and equally importantly had transferred 268 technologies to industry. In an age where we cannot compete with China on producing new PhDs and fall woefully short of the developed countries, it makes sense to invest good money on a space program if it can generate technologies which Indian industry can commercialize. In a way this would optimize meager resources.
Eventually patent royalties can help finance the space agency, but that is besides the point. Focusing on a space program using nationalist jingoism and defense hawkishness to drum up support can actually help stimulate industry with hi-tech inputs, besides acting as an incubator for world-class research capabilities. This would actually enable us to “splurge” on space research. Of course the aim should be to reach the standards of the best in the world, and aggressively seek to commercialize spin-off effects and rake in the royalties to make the research self-sustaining, eventually.

In the medium run: Strategic Advantage

India’s current space ambitions are something we would not have realistically thought likely even 10 years ago. The Space Recovery Experiment was a fantastic achievement. If the Chandrayaan mission is successful we will have high quality remote sensing maps of the moon, and also will have landed a craft on the moon. Over the next 2 decades, we aim to send a human into space, and eventually to the moon. Maybe even have a manned space station.

If our ambitions are remarkable then they are so by our own standards. In the United States, which is the leading space faring nation right now, these achievements have become so mundane that private industry is aiming to commercialize them. While Virgin will take customers to space, Bigelow Industries already has a prototype (unmanned but with living organisms) space station in orbit. Google is sponsoring a competition for organizations to land a spacecraft on the moon, with little or no government assistance.

That takes a lot of the glory out of the achievements but it does raise another important point: commercial exploitation of space technologies is becoming the newest frontier for business and the sky is literally the limit here. We do not know at this stage how big this business is going to be in the near term, so there is no urgency for India Inc to jump in immediately. But as ISRO builds these technologies for the future, it should ensure our domestic economic are not denied an edge that could be crucial.

In the long run: Necessity

Predicting future trends beyond a few years is always wrought with danger. Based on current trends there are two resources for which human civilization should eventually have to look to space for: solar power and mineral resources.

The sun is a huge nuclear fusion reaction and economically capturing power from the sun is the holy grail of the energy industry. When the technology is feasible, space-based solar power would be a resource that will beat any form of solar power generation on earth.

Big as the current energy crisis on earth is, in the longer run a bigger problem concerns our pursuit of mineral resources. As urbanization grows our cities are getting bigger and bigger – as are our buildings. A logical extension of this growth would be the eventual construction of the giant structures propagated in arcology. Currently designs exist for buildings that can house upto a million residents, and such buildings will become cities by themselves.

An era of such mega structures is imminent, and in view of our dwindling mineral resources and growing environmental concerns we are likely to look to space to meet our requirements. A time when mineral resources from the moon or the asteroids is comparable in cost to those from earth is very far. But when that time arrives the space faring nations will beat a huge advantage – especially if extra-terrestrial matter is going to get “colonized” by us humans.


A space program even while catering largely to defense and political needs, presents a big opportunity to give the economy a competitive edge in the short, medium and long run. Even though this mutual benefit is not a foregone conclusion the upside potential certainly exists and only remains to be adequately exploited.


  1. Completely agree. Actually, the space program gives the population something to dream about and gives room for governments to increase research expenditures. And the spinoff effects are great. When Kennedy gave his space vision, Americans of that era mesmerized completely and entered Computer Science and Electronics in mass numbers and produced some of the glorious inventions during that period. Even in a rapidly changing field like Computer Science, we always look back to the great works of 1970s – whether it be the birth of Internet or the revolutionary UNIX operating system and C programming language. One of the reason for the decay of American science currently is a lack of such dream and motivation. Most bright lads choose to go to finance, law and other areas that doesn’t add as much productive value to the economy :-) and thus economy fading at the rise of two emerging powers that base their foundation in Technology.

    India’s space program is worth, if not for anything, the dream it gives our kids and motivation for the students to study science and math. I fondly remember the school lessons on space that we had, reading about Rohini and Aryabatta and kept our heroes as Kalam and Sarabhai. This is this dream of the kids that will change India’s vicious poverty. By replacing couple of satellites with hundred thousand tonnes of rice, we maybe able to postpone hunger by a day, but nothing more. Our destiny lies in Science and Technology.

    Comment by Balaji Viswanathan — February 5, 2008 @ 10:26 am

  2. In my opinion, the Indian space program has already started yielding economical benefits to the country. the first example is Telecom. India is today having one of the fastest and biggest telecom network in the world, thanks to the network of TDSAT sattelites of ISRO. next immediate beneficiary is the media…and i guess there are many more benefitted sectors

    Comment by Raja — February 7, 2008 @ 11:14 am

  3. Space program and nuclear weapons are things that are tied to our independence and thus priceless.However they also do provide considerable spin offs in terms of enhancing our materials science and aerospace capabilities besides serving as a huge billboard for the technical prowess in this country vis a vis say Pakistan and the phillipines or eastern europe(excl russia/ukraine) for that matter.

    Comment by Shantanu Chatterjee — February 7, 2008 @ 11:41 am

  4. This post does not give proper justice to India’s space program. At best, it is an understatement of economic benefits generated from space exploration.

    There is no mention of weather forecast, national planning, drought management, entertainment industry, which cannot run even single day without satellite data. Recent surge in cable based information transfer have reduced the burden on satellite based telecommunication nevertheless satellite remains necessary part of reliable communication. The number of lives saved from natural disasters such as flood and forest fire using satellite imagery can alone justify India’s expenditure on space technology.

    Comment by Harish — February 9, 2008 @ 4:56 am

  5. Shouldn’t it be Indian Space Programme?

    After seeing it mentioned throughout my lifetime in the above-mentioned way, the word ‘program’ looks incongruent.

    The space programme is more to fulfill strategic needs than to produce economic benefits. It initiation was the direct result of the vision of Nehru and Sarabhai. The programme has worked successfully and has had the input of scientists and engineers- some extremely partiotic who took risks on themselves and many who didn’t care about economic benefits.

    It has also had enormous waste and a lot of resources were diverted to it. These resources could have been better used for the welfare of the poor – many living in sub-saharan conditions. The programme certainly has not brought any economic benefits to this section of the population.

    Comment by HmmBut — February 10, 2008 @ 4:58 am

  6. One commenter used satellites to justify continued exploration of space, as if a past discovery will somehow disappear if future exploration isn’t pursued. I believe practical applications of space exploration have all but peaked, so to use an analogy, pursuing space exploration is like digging for oil in a place where it has already been discovered. The returns of such costly endeavors are diminishing to the level of entertainment value at best, and such high-cost entertainment is best left to the West as it consumes itself into oblivion while trying to pay for it with Monopoly money.

    In the meanwhile, blowing your nose in Mumbai still results in a soot-covered handkerchief; I’d like to see that issue taken care of first before the bigwigs start playing astronaut with our tax money.

    Comment by Tr0nik — February 10, 2008 @ 8:40 am

  7. @Harish
    Satellite images for weather forecasting and transponders for media companies are commercially available (ISRO commonly sells these services and is likely to earn almost $200m this year). My point is you can simply pay a Western aerospace companies to build and launch these satellites for you – the direct benefits of doing these things locally to the economy are negligible. (This too is a market the ISRO is trying to get into).

    Talking of non-direct benefits, here is an extract from a recent story in the TOI:
    “To date, the entire Indian space program has spent only about $ 2 billion to accomplish a wide range of feats. It has delivered $ 3 billion in value in the social sector alone, according to a study by a Chennai school of economics. ”

    Comment by Kiran — February 10, 2008 @ 5:36 pm

  8. In addition to the benefits mentioned in the blog and subsequent comments following it, satellite communications itself will cover a larger cost of our space program. Remember the time we had to wait five to seven years for a landline, now the whole of India is connected not just by phone and by satellite communications for commerce, economic, educational and various other important purposes. The savings in laying copper cables for a country like India and the reduction in cost of communication by itself is a substantial one. We could have done all of this without our own space program. However, with the increasing competition in the global economy between the developed and the developing nations, I strongly believe that we need to have our own resources so that our economic and defence data is not compromised. I am a non resident Indian for a long time and the pride Indians feels in our technological achievements is tremendous and is showing in our attitudes and the way we are conducting ourselves with the outside world. Without our own input and investment in technology, we will be no different than the oil producing countries of Middle East who are consumers of technology and are not producing it. The continued political and economic benefit the Indian space program is providing cannot be questioned.

    Comment by Syde Amed — February 10, 2008 @ 8:44 pm

  9. You forgot the Application in Indian Railways and GPS

    Comment by chetan — February 10, 2008 @ 9:30 pm

  10. in the past 60 years the missions to moon mars or any other planet has yielded no economical benefits. (satellites r a different issue)

    Comment by ankur — February 10, 2008 @ 10:19 pm

  11. Many commenters here seem to be attacking non-satellite based space programs, a lot. I’m sure when nations first launched satellited in late 50′s to early 60′s there were no immediate benefits then. Most of it were pure science. It didnt immediately result in our current GPS navigation system or remote sensing, and it took a long time before those initial adventures paid off. Science is all about making current investments for posterity. IF you keep making scientific explorations, someday you will hit gold.

    And you can never predict the unknown. A person in circa 1450 would have sworn that the flat world ended past the coast of iceland. So, the mission of Columbus would have been considered monumental waste. The rest is history.

    And, just because nothing much has been found after 60s does not mean space exploration is worthless. US has slumped in Science/Technology (as evidenced by the changed demographics in the Phd programs) after 1970s and space program received scant attention (no new lunar expeditions and such). And in the meantime, USSR collapsed and thus worldwide space exploration has been left cold. Its time India and China that produce great engineers/science students to take the mettle and solve the many unknown problems.

    Comment by Balaji Viswanathan — February 11, 2008 @ 1:48 am

  12. There are already many known problems to be solved, I don’t think we have to venture as far as space to test the mettle of Asia’s intellectual community.

    Comment by Tr0nik — February 11, 2008 @ 4:25 am

  13. @Balaji: just to add to what you are saying, when Michael Faraday first demonstrated the magnetic effect of an electric current (and vice versa) he was asked whether it would ever be useful. His reply was legendary, “Of what use is a newly born baby?”. The phenomenon discovered by Faraday is used to produce almost all electricity in the world today.

    Many technologies in consumer electronics today owe their birth to research into defense and space.

    Comment by Kiran — February 12, 2008 @ 4:49 pm

  14. There are a bunch of NASA spinoff technologies that are listed here.

    There are numerous indirect benefits in addition to direct ones such as remote sensing, defense applications etc.

    Comment by Prakash — February 13, 2008 @ 2:00 pm

  15. The planned ‘manned moon mission’ seems ambitious and exhibistionist.
    Do we really need it or afford it ? cost/benefit analysis of all
    programs are a must.

    Comment by K.R.Athiyaman — February 13, 2008 @ 6:50 pm

  16. Good post. You make some great points that most people do not fully understand.

    “A space program even while catering largely to defense and political needs, presents a big opportunity to give the economy a competitive edge in the short, medium and long run. Even though this mutual benefit is not a foregone conclusion the upside potential certainly exists and only remains to be adequately exploited.”

    I like how you explained that. Very helpful. Thanks.

    Comment by chiz — February 25, 2008 @ 7:23 pm

  17. why is India, a country that still has so many development problems on the ground, aiming for the heavens?

    As one among many Engineers who joined ISRO straight after college we all cherished a vision and believed Space research was not only important for science, but also vital to India’s development.I am giving below a few of the benefits which space research and particularly ISRO has done us proud.
    Take, for example, India’s six remote-sensing satellites – the largest such constellation in the world. These monitor the country’s land and coastal waters so that scientists can advise rural communities on the location of aquifers and where to find watercourses, suggest to fishermen when to set sail for the best catch, and warn coastal communities of imminent storms (see “Eyes in the sky”). India’s seven communication satellites, the biggest civilian system in the Asia-Pacific region, now reach some of the remotest corners of the country, providing television coverage to 90 per cent of the population. The system is also being used to extend remote healthcare services and education to the rural poor.
    When India first detonated a nuclear device in 1974, the US and European nations imposed widespread sanctions to restrict India’s access to technologies that could be used to make a nuclear missile. This hobbled the country’s rocket development programme and forced the Indian Space Research Organisation (ISRO) to reinvent technologies it could no longer buy. In the long run this has given India an advantage over other countries with aspirations to reach space. Its space programme is already largely self-sufficient and aims to soon be completely independent of foreign support.
    India’s space programme is already a money-earner. ISRO sells infrared images from its remote-sensing satellites to other countries, including the US, where they are used for mapping. And the Technology Experiment Satellite, launched in October 2001, is beaming back images of the Earth’s surface with a resolution of 1 metre, though they are not yet available commercially.
    > using imaging satellites for development remains at the top of the agenda for the Indian Space Research Organisation (ISRO).infrared images are used to measure the reflectance of plant-covered surfaces to check how well watered the crops are. It is also possible to distinguish between crops such as rice, wheat and cotton, and even predict whether a crop might fail for lack of water.Ensuring a supply of clean drinking water is a problem in many parts of rural India. Villagers often resort to guessing the right spot to drill a well based on experience, but it is a hit-and-miss affair. Topographic and hydrological maps produced from satellite images allow rural communities locate areas most likely to yield underground water.The next step for ISRO team is to use the same information to work out where to build small dams to capture rainwater and recharge underground reservoirs. This approach could help reclaim arid and semi-arid land for agricultural use.
    ISRO’s satellites are also having an impact at sea. OCEANSAT, launched in 1999, monitors the chlorophyll content of oceans and the sea surface temperature. ISRO scientists use the information to identify areas where cold, nutrient-rich water wells up from the ocean floor, which in turn attract fish.The coordinates of these areas are then sent to more than 200 coastal centres. The upwellings last for several days – meaning the areas identified contain high concentrations of fish – long enough for fishermen to arrive and gather a sizeable catch. According to ISRO sources, fish catches have doubled in the last decade.
    Besides remote sensing, ISRO operates eight communications satellites. These are now used by 35,000 commercial customers, all based in India
    ISRO has also used these satellites to implement disaster-warning systems. In 1977 a cyclone killed 10,000 people on the coast of Andhra Pradesh in south-east India. In the 1990s data from meteorological satellites was used to warn of a similarly devastating cyclone, dramatically reducing the loss of life to 900.
    ISRO is becoming more ambitious in how it plans to use these satellites. It has already linked 69 hospitals in remote areas of India such as the Andaman Islands to 19 hospitals in India’s main cities. A health worker in a remote location can then transmit a patient’s medical information to a specialist in seconds and, in many cases, a video consultation is sufficient for diagnosis. This means the patient can avoid travelling huge distances unless it is absolutely necessary.

    Comment by balan — May 4, 2008 @ 11:19 pm

  18. everyone says that the resources were better spent on education, food security, roads etc.

    oh really? if it were to be allotted to all the above purposes, it would merely get eaten up by corrupt officials. thats exactly whats happening to the allocations for these purposes right now. better a billion rupee sattelite than a billion rupees worth of bad roads and non existent village schools.

    Comment by sachin nair — May 7, 2008 @ 10:54 am

  19. Additionally, launch vehicles like PSLV are generating money by launching foreign satellites.. thats still a good chunk of income (though not a profit)..

    Comment by kaubhai — May 20, 2008 @ 6:33 am

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