The 2024 theme for National Science Day, which India celebrates on February 28 every year, is ‘Science for Sustainable Development’.
Scientific and technological developments are key drivers of India’s journey to become a developed country by 2047. India is committed to making this progress in a sustainable manner, as evidenced by its commitments under the Paris Agreement, participation in global forums for sustainable development and reinforced this year’s theme for Science Day. The role of science in driving sustainable development needs no emphasis, but any conversation about science is incomplete without setting one key expectation: for science to transform India, it must be funded sustainably and consistently.
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How much does India spend on R&D?
Funding for basic research in India is among the lowest in the world, especially for a country with high ambitions in science and technology. In the recent past, India’s R&D expenditure has fallen to the current 0.64% of GDP, from 0.8% in 2008-2009 and 0.7% in 2017-2018. This lower spending is worrying as government agencies themselves have made several calls to double this spending.
The 2013 Science, Technology and Innovation Policy noted that “increasing Gross Expenditure on R&D (GERD) to 2% of GDP has been a national objective for some time.” The Economic Survey 2017-2018 reiterated this in the chapter on the transformation of science and technology.
The reasons for the reduction in research and development (R&D) expenditure, despite the government’s awareness of the need to increase it, are not clear but may stem from a lack of coordination between government agencies and the need for stronger political will to prioritize research and development spending.
Most developed countries spend between 2% and 4% of their respective GDP on research and development. In 2021, member states of the Organization for Economic Co-operation and Development (OECD) spent an average of 2.7% of GDP on R&D. The US and Britain have consistently spent more than 2% of their GDP on research and development over the past decade. Many experts have therefore called on India to spend at least 1%, but ideally 3% of its GDP on R&D annually until 2047, so that science can have a meaningful impact on development.
How can India improve its R&D expenditure?
Science requires consistent, large-scale investment to pay off. If India wants to achieve the status of a ‘developed nation’, the country needs to spend more on scaling up R&D than the developed countries spend to maintain that status. This forms the basis of the requirement to spend at least 3% of GDP on R&D annually until 2047.
And apart from the fact that current spending is inadequate, the primary dependence on public money indicates an immature financing system and a weak domestic market. In 2020-21, the private sector contributed 36.4% of the GERD, while the Union government’s share was 43.7%. State governments (6.7%), higher education (8.8%) and the public sector (4.4%) were the other major contributors.
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In economically developed countries, a large share – on average 70% – of R&D investments comes from the private sector. The hesitancy towards private sector financing may be due to the poor ability to evaluate R&D in India, ambiguous regulatory roadmaps that can deter investors, a lack of clear exit options for investors in sectors such as biotechnology, and to the fear of theft of intellectual property rights.
Although the Anusandhan National Research Foundation was intended to solve some financial problems, its implementation has been postponed. The annual budget of Rs-2,000 crore that the government had set aside for its implementation in the previous budget was revised to Rs 258 crores this year. Strategies on how to raise the remaining budget of INR 7,200 crore from the private sector have also not been clarified yet.
Thus, there is a perceived need to determine the total amount of R&D funding and its primary sources, given India’s ambition to be a developed country by 2047.
How is the R&D budget spent?
While the need for India to at least double its R&D investments has been expressed several times, the question of how effectively the allocated money is spent is less often explored. The Union Ministry of Science and Technology has consistently underutilized its budget, so while the call for more funding – both through government and private sources – is legitimate, enhanced budget utilization is also needed to impact scientific outcomes .
In 2022-23, the Department of Biotechnology (DBT) used only 72% of the estimated budgetary allocation for 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 underutilization is not a one-off error, but is recorded consistently to varying degrees over several years. The phenomenon is also not specific to the Ministry of Science; Since India generally spends too little on R&D, there is likely to be a major impact if the allocated resources are spent optimally.
The reasons for the underspend, as with the underspend, are unclear and may indicate tedious bureaucratic processes for approving disbursements, a lack of capacity to evaluate projects or clear certificates of use, a lack of prioritization of scientific funding by the Ministry of Finances or insufficient planning or implementation strategy for the requested resources by the Ministry of Science and Technology.
The lack of capacity is also reflected in delays in the payment of subsidies and salaries. Most of these problems can be solved through proper capacity building within the various government agencies.
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What does sustainable financing mean?
In the last Budget, Finance Minister Nirmala Sitharaman gave many indications that the government would like R&D expenditure to include more contributions from the private sector. Against this background, reducing under-spending and under-utilisation of R&D resources is an obvious first step. This in turn requires the political prioritization of R&D expenditure and its recognition as an irreplaceable core element of India’s growth trajectory.
This prioritization must take place not only within the ministries involved, but also at the Ministry of Finance, which disburses the funds. Incentives for private investment, including relaxation of FDI, tax rebates and clear product roadmaps, will help boost investor confidence.
Finally, India also needs the bureaucratic capacity to evaluate scientific projects and, once awarded, monitor their utilization. Building such a capacity is a prerequisite for India to become a scientific power by 2047. So on this National Science Day, as we celebrate science for sustainable development, let us also remember that we need sustainable financing for science.
NOTE – This article was originally published in bhmnews.xyz and can be viewed here
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