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.