GS Paper III
News Excerpt:
The 2024 theme for National Science Day (28th February) is “Science for Sustainable Development”.
India’s spending on R&D:
- In the recent past, India’s R&D expense has dropped to the current 0.64% of GDP from 0.8% in 2008-2009 and 0.7% in 2017-2018.
- This reduced expenditure is worrying, considering government agencies themselves have issued several calls to double this spending.
- Funding for fundamental research in India is amongst the world’s lowest.
- The 2013 Science, Technology, and Innovation Policy noted that “Increasing Gross Expenditure on R&D (GERD) to 2% GDP has been a national goal for some time”.
- The 2017-2018 Economic Survey reiterated this in its science and technology transformation chapter.
- The reasons for the reduction in research and development (R&D) spending, despite the government being cognisant of the need to increase it, are not clear but may stem from a lack of coordination between government agencies and a need for stronger political will to prioritise R&D expenses.
- Most developed countries spend between 2% and 4% of their respective GDPs on R&D.
- In 2021, member-countries of the Organisation for Economic Co-operation and Development (OECD) on average spent 2.7% of GDP on R&D.
- The U.S. and the U.K. have consistently spent more than 2% of their GDPs on R&D for the past decade.
- Experts have called for India to spend at least 1%, but ideally 3%, of its GDP every year until 2047 on R&D for science to have a meaningful impact on development.
How is the R&D budget utilised?
- In 2022-2023, the Department of Biotechnology (DBT) used only 72% of its estimated budget allocation on Centrally Sponsored Schemes/Projects, while the Department of Science and Technology (DST) used only 61%.
- The Department of Scientific and Industrial Research (DSIR), which receives the lowest allocation for Centrally Sponsored Schemes, spent 69% of its allocation.
- Such underutilisation is not a one-time error but has been consistently recorded over several years to varying degrees.
- The phenomenon is also not specific to the Science Ministry; given India generally under-spends R&D, there will likely be a major impact if the allocated funds are spent optimally.
- The reasons for under-utilisation, as with the under-allocation, are unclear and may indicate -
- Tedious bureaucratic processes for approving disbursements,
- Lack of capacity to evaluate projects or clear utilisation certificates,
- Lack of prioritisation for science funding by the Ministry of Finance or inadequate planning or implementation strategy for the requested funds by the Ministry of Science and Technology.
- The lack of capacity also reflects delays in grant and salary disbursements. Proper capacity building within the different governmental agencies can fix most of these issues.
Public sector vis-a-vis Private sector:
- As the current spending is inadequate, its primary dependence on public money signals an immature financing system and weak domestic market.
- In 2020-2021, the private sector industry contributed 36.4% of the GERD, whereas the Union government’s share was 43.7%.
- State governments (6.7%), higher education (8.8%), and public sector industry (4.4%) were the other major contributors.
- In economically developed countries, a major share – 70% on average – of R&D investment comes from the private sector.
- The hesitancy of private-sector funding may be because of the poor capacity to evaluate R&D in India, ambiguous regulatory roadmaps that can deter investors, lack of clear exit options for investors in sectors such as biotechnology, and fears of intellectual property rights theft.
- Thus, there is a perceived need to determine the overall quantum of R&D funding and its primary sources, given India’s ambition to be a developed country by 2047.
Way forward:
- For India to reach ‘developed nation’ status, it needs to spend more to scale R&D than developed countries spend to maintain that status.
- This is the foundation of the demand to spend at least 3% of the GDP on R&D annually until 2047.
- Mitigating the under-spending and under-utilisation of funds earmarked for R&D are obviously imperative.
- It requires the political prioritisation of R&D spending and recognition of it as a core, irreplaceable element of India’s growth journey.
- This prioritisation has to happen within the concerned Ministries and at the Ministry of Finance, which disburses the funds.
- In the latest budget, the Finance Minister of India indicated that the government would like R&D expenditure to include more contributions from the private sector.
- Incentives for private investment, including relaxation of foreign direct investments, tax rebates, and clear regulatory roadmaps for products, will help build investor confidence.
- Finally, India also needs the bureaucratic capacity to evaluate science projects and, after allocations, monitor utilisation.
- Building such capacity is a prerequisite for India to become a science power by 2047.
Conclusion:
The Union Ministry of Science and Technology has consistently under-utilised its budget. So, while the calls for increased funding – through both government and private sources – are legitimate, a strengthened budget utilisation is also required to affect science outcomes.