Issues with India’s R&D expenditure

Source: The post issues with India’s R&D expenditure has been created, based on the article “Can this Budget be a 1991 moment for science and technology?” published in “Indian express” on 10th July 2024

UPSC Syllabus Topic: GS Paper3-Science and Technology

Context: The article emphasizes the need for increased investment in science and technology in India. It suggests reforms like merging scientific institutions, mandating private sector R&D spending, and excluding building costs from R&D figures to boost innovation and development.

For detailed information on India’s R&D Funding Status read this article here

What is the current state of R&D spending in India?

Current R&D Spending: India currently allocates only 0.6% to 0.7% of its GDP to research and development, significantly lower than the targeted 2%.

What are the issues with India’s R&D expenditure?

1. Low R&D Expenditure: India’s spending on R&D is significantly lower than many other countries, standing at just 0.6% to 0.7% of GDP, compared to countries like the US (2.8%), China (2.1%), Israel (4.3%), and South Korea (4.2%).
2. Disproportionate Government Spending: The government sector accounts for 56% of India’s total R&D expenditure. This is much higher than in other nations, where private sector involvement is more prominent, like in China (15%), Germany (14%), the UK (7%), and Japan (8%).
3. Capital Expenditure Bias: A large portion, 44%, of India’s R&D budget is allocated to capital development, such as infrastructure and land acquisition, which contrasts sharply with countries like the UK and the US where virtually none of the R&D budget goes to such expenditures.

What lessons can India learn?

1. Lessons from Other Countries

Increase R&D Funding: As seen with China, which raised its R&D investment from 0.7% of GDP in the 1990s to 2.1% currently. In 2019, China’s R&D spending reached USD 525.7 billion in PPP terms, vastly exceeding India’s USD 58.7 billion in 2018.

1. Lessons from India’s Own Successes
2. Autonomy in Key Sectors: India’s success in space and atomic energy is largely due to the autonomy given to the Space Commission and the Atomic Energy Commission. These bodies are free from bureaucratic delays, fostering more effective project execution.
3. Integrated Leadership: Effective leadership structures involving senior scientists and high-level government officials have proven successful, as seen with the empowered bodies managing space and atomic energy initiatives, leading to significant advancements.

What should be done?

1. Promote Private Sector Involvement: Encourage private sector participation by mandating companies to allocate 2% of their profits to R&D, similar to corporate social responsibility rules.
2. Support State-Level Research: Allow state governments to raise funds exclusively for R&D projects approved by the National Research Foundation. This will decentralize and enhance research capabilities across India.

Question for practice:

Discuss the current state and challenges of R&D spending in India.