India’s Expenditure On Research And Development, Explained

India’s track record of spending on Research and Development (R&D) is lamentable. For a country which aspires to be one of the world’s superpowers and knowledge capitals, such disregard for investment in science and technology is highly disconcerting. So, it was a pleasant surprise to see a whole chapter dedicated to science and technology (S&T) in the 2017-18 Economic Survey prepared by Chief Economic Adviser (CEA) Arvind Subramanian and his team. He must be applauded for giving such a critical sector its due, which otherwise doesn’t find deserving space in policy or the political discourse of the country.

The survey rightly points out that India under-spends on R&D “even relative to its level of development” and calls for doubling of spending on R&D with preponderance of the increase coming from private sector and universities. It proposes a road map to reform the way R&D is conducted, to engage the private sector and the Indian diaspora, and also recommends to take a more mission-driven approach in areas such as dark matter, genomics, energy storage, agriculture, and mathematics and cyber physical systems.

But before we discuss solutions proposed by CEA and team, it is imperative to understand the problem and its nature. An overview of how much India spends and the way it spends on R&D is in order.

First, let’s take a look at the total expenditure and the trend of spending over the years.

As the chart shows, India’s gross expenditure on R&D (GERD) trebled from Rs 24,117.24 crore in 2004-05 to Rs 85,326.10 crore in 2014-15. In 2016-17, it is estimated to have stood at Rs 1,04,864.03 crore.

The graphs seem to show consistent increase in spending but as percentage of gross domestic product (GDP), GERD was mere 0.69 per cent in 2014-15 and in per capita terms, it was Rs 659. And as one can observe, R&D as percentage of GDP is only a whit better than what it was in 1995-96 - before the Internet revolution! Though we account for 17 per cent of world’s population (2011 census), in R&D spending we account for just 2.7 per cent share in world GERD during 2014-15 to 2016-17.

Second, India’s expenditure on R&D (as percentage of GDP) compared to other countries also paints a dismal picture.

India spent 0.69 per cent of its GDP on R&D in 2014-15. Forget developed nations, India was the lowest spender even among BRICS countries - Brazil (1.24 per cent), Russian Federation (1.19 per cent), China (2.05 per cent) and South Africa (0.73 per cent). Major developed countries spend more than 2 per cent of GDP on R&D. More important is how various countries have ramped up expenditure on R&D while India is moving at a snail’s pace.

The figure below shows R&D spending by various governments as a percentage of GDP in development time. It shows how India fares today compared to other countries at a similar development level. If we look at trajectory taken by China, Korea, Japan and Israel, we will understand why they are innovation powerhouses today.

Third, take a look at which sector contributes how much in the country’s total R&D spending. In India, the government is the biggest contributor to GERD with the central government accounting for 45.1 per cent, state governments 7.4 per cent, public sector industries 5.5 per cent (all three - 58 per cent) in total expenditure. Higher education’s 3.9 per cent share is not significant. Private sector industries contributed 38.1 per cent. (2014-15)

Out of total government spending, about three-fifth share goes into funding atomic energy, space, earth sciences, science and technology and biotechnology. In 2014-15, 81.3 per cent of the total R&D expenditure by central government went into funding eight major agencies like DRDO, DoS, DAE, etc as shown in figure below.

Fourth, India stands in stark contrast with other countries when we compare breakdown of GERD by contributing actors. In India, the government contributes more than 50 per cent to GERD while higher education sector or private sector participation is quite low. It’s quite the opposite in other nations as shown in below figure.

Clearly India is an outlier. Mexico, with 38 per cent contribution to GERD by government, comes close to us but it’s not the county we aspire to compete with. In China, business enterprises account for 77 per cent share in GERD. While our universities contribute measly 4 per cent to GERD, in China the figure is 7 while in developed nations like US, UK, and Canada it is 13, 26 and 40 per cent respectively.

Fifth, despite the lacunas, India’s scientific publication output is increasing every year. According to the SCOPUS database, research output increased by 68 per cent from 62,955 in 2009 to 1,06,065 in 2013 and according to SCI database, it increased by 31.5 per cent from 39,672 to 52,165 in the same period.

In the same period (2009-2013), while the world average of growth rate of scientific publication stood at 4.1 per cent, India’s growth rate was impressive 13.9 per cent as per SCOPUS (and 7.1 per cent as per SCI).

Scopus database on trends in scientific publication shows that India improved its rank from 12 in 2005 to 6 in 2013.

Sixth, of all the patents filed in India in 2015-16, just 28 per cent were filed by Indian residents. Majority of the foreign patents came from three countries: USA, Japan and Germany, in that order.

A really disheartening fact from the above figure is drastic fall in share of Indian residents in total patents. It fell from a high of 40 per cent in 2001-02 to 15 per cent in 2015-16.

Having surveyed the R&D scene in the country, the question is how to go about improving science and R&D in the country. The Economic Survey outlines eight steps:

First, improving math and cognitive skills at the school level. The survey rightly notes that no country can create a vibrant super-structure of R&D with weak foundations of primary and secondary education for so many of its young.

Second, it suggests gradually moving towards establishing an investigator-driven model for funding science research, by setting up bodies such as Science and Engineering Research Board (SERB) which have sanctioned about three and half thousand new R&D projects to individual scientists.

Third, increasing funding for research from private sector as well as state governments. Supporting STEM research via CSR funds is already supported but more activities can be added to it. Both the government and private sector collaborating on some projects can be another way to boost expenditure. The survey also underlines the need for the states to invest in application oriented research aimed at problems specific to their economies and populations.

Four, linking national labs to universities and creating new knowledge eco-systems. The survey suggests linking research with teaching: universities have students but not enough faculty members while research institutes have faculty but not enough students. Linking them can prove beneficial for both.

Five, the survey recommends focusing on some key chosen areas which are strategically important and can have great societal impact such as mission on dark matter, genomics, on energy storage systems, on mathematics and agriculture.

Six, leveraging talent of thousands of scientists born in India but now living and working abroad. This, the survey suggests, can be done through programmes such as the Ramanujan Fellowship Scheme, the Innovation in Science Pursuit for Inspired Research (INSPIRE) Faculty Scheme and the Ramalingaswami Re-entry Fellowship, Visiting Advanced Joint Research Faculty Scheme (VAJRA) and so on.

Seven, improving culture of research by inculcating less hierarchical governance systems in Indian research institutes which are less beholden to science administrators and encourage risk-taking and curiosity in the pursuit of excellence.

Eight, engaging more with the society rather than making research centres typically ivory towers. The survey exhorts scientists to create broad public support for their work and not treat it as an entitlement.