Improving R&D Spend

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03 Feb 2018, 6:30 pm

India is a top knowledge consumer, aspiring to become a 5 trillion dollar economy in under a decade. One-fifth of this growth is expected to be contributed by the manufacturing sector, and the Central government has begun consultations among core ministries to frame an appropriate industrial policy. In his budget speech, Fince Minister Arun Jaitley projected a growth rate of ‘8 percent plus’ to bring about this targeted doubling of the country’s economy. Earlier at the World Economic Forum meet in Davos, Prime Minister rendra Modi spoke of the wide-ranging reforms his government has carried out in last three years, the strong fundamentals of the Indian economy presently and how ‘innovation and entrepreneurship are making young Indians job givers, not job seekers’. However, if India is to grow rich faster, it has to do better in becoming a net producer of knowledge. This in essence is the cautiory note struck by the Economic Survey 2017-18. Calling for doubling the expenditure on research and development in science, the report is a telling commentary on the patchy, imbalanced ture of R&D spend in the country so far. Firstly, unlike most advanced and major developing countries, in India it is the government that does most of the R&D spending, not the private sector. It is also the government that is the primary user of these funds. Then again, it is the Central government that mostly invests in R&D, with about 60 percent of the money going to key agencies like Atomic Energy, Science and Technology, Space, Earth Sciences and Biotechnology. Whatever little the States spend, the picture is highly skewed. “Six Indian States out of 29 account for half of R&D, four-fifths of patents and three-quarters of FDI. Moreover, even within each State, only one or two cities are research hubs,” the survey states. As for the private sector which puts up just 43 percent of R&D spend, over half the investment is restricted to pharmaceutical, automobile and software sectors.

In the decade from 2004-05 to 2014-15, India’s gross expenditure on R&D tripled, while in the year 2016-17, GERD was estimated at Rs 1,04,864 crore. But in terms of this expenditure vis-a-vis GDP, the ratio remained stagnt at barely 0.7 percent, with the survey noting: “India underspends even relative to its level of development.” For comparison, it has mentioned the likes of US where GERD to GDP ratio is 2.8 percent, Chi at 2.1 percent and Israel and South Korea both at 4.2 percent. Drawing the correlation between a country’s R&D spend and economic growth, the survey points out that while India published 12,000 scientific papers in 1991 which was double that of Chi’s, the situation was reversed in just two decades with Chi’s output at over 1.2 lakh papers in 2011 which was thrice that of India’s. And during this period, Chi galloped ahead of India in terms of size of economy and per capita income. Presently, the number of researchers per million people in India stands at 156, while it is 1,113 in Chi and 4,231 in the US. Referring to a Forbes 2017 alysis, the survey shows that while 26 Indian companies figured in the list of top 2,500 global R&D spenders, the number of Chinese companies stood at 301. Another worrisome aspect of the survey is the state of R&D contribution by Indian varsities, pegged at a miniscule 4 percent. It is a pointer to misplaced priorities in the country’s higher education, with innovation consistently backseat, the university-industry interface utterly rudimentary, and a continuing crisis in teaching and research. Then again, it is pointed out that while the Indian patents office is the seventh largest in the world, most of the patents are being filed by foreign companies.

The Indian economy, however, has been on the march despite occasiol hiccups, and the spill-off effects have been observed in its steadily growing innovative prowess. This was evident last year too when the country jumped six ranks to 60 in the 2017 Global Innovation Index, the 7th consecutive year the country ‘outperformed on innovation relative to its GDP’. Significantly, the study, carried out by Cornell University, the French business school Insead and the World Intellectual Property Organization (WIPO), credited India for defying the standard model of the most developed countries. “India has shown improvement in most areas, including in infrastructure, business sophistication, knowledge and technology and creative outputs,” the GII study noted. Clearly, public policy undertaken in the last couple of years to encourage innovation, particularly for new economy start-ups, seems to be paying dividends. This besides, a UNESCO study has appreciated India’s growing focus on ‘frugal innovation’ — coming up with smart, cost-effective solutions to technological and production problems. Even a study last year by Chi’s Science Technology Exchange Center noted in the BRICS Innovation Competitiveness Report 2017 that India could surpass Russia and challenge Chi in innovation by 2025. The Economic Survey 2017-18 has therefore given a timely call for investing in educating the youth in science and mathematics, engaging the private sector much more in R&D, adopting a mission approach in critical scientific areas, and improving the ‘ease of doing science’ index in the country. Creating new knowledge ecosystems, linking applied research to socio-economic outcomes, and diffusing technology widely should also be other major efforts.

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