India’s Space Program - An Economy Perspective

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.

Disclaimer: This is not an original publication


Popular posts from this blog

What is Nestlé Waters Hiding?

Would Warren Buffett buy the iPhone 7? Probably not!!

More interest for your Savings Account