Underwhelming At Best
As announced earlier by Finance Minister Nirmala Sitharaman, being a vote on account budget for the election year, no big announcement was expected when she presented the budget for 2024-25. Still, some of the exceptions include stress on encouraging research and innovation. The FM announced setting up of Rs 1 lakh crore corpus to promote research and innovation in sunrise domains by lending innovators long-term financing or refinancing with extended tenures and low or no interest rates.
Earlier, the government made research labs of various government research institutes available in different areas to the private sector on a timesharing basis. This aided in government labs’ tieups with the private sector in pharma. In addition, some companies are receiving funds under the R&D-linked incentives scheme.
Nobody would deny the need for growing gross expenditure on R&D (GERD) which is lingering around just 0.8 per cent of the GDP. While Israel is spending over 4.5 per cent on research events the world average is 1.8 per cent and developed countries spend around 3 per cent. The use of corpus may help push the low percentage expenditure on R&D to a higher level.
While the research community and industry have welcomed the finance minister’s announcement in general, some apprehensions have been expressed in certain quarters. Some scientists feel that instead of making the funds available to the private sector for research, they should be made to universities and research institutions since research in the private sector is mostly profit driven. However, the finance minister has just made an announcement of setting up of the corpus. Its modalities and how much of it will go to research in the public or private sector has not yet been announced. The government can consider the opinion of scientists while finalising the rules, etc.
The second apprehension is about non availability of adequate funds for the existing institutes when the new setting of corpus has been announced. The National Research Foundation (NRF) was set up by a statute eight months back to centralise science research funding replacing the current various government funding agencies. As per 2021-22 budget, Rs 50,000 crore were to be set aside in five years. Of the Rs 50,000 crore set aside by NRF over five years (2023-28), some Rs 36,000 crore (72 per cent) was expected to come from the private sector. Thus, the government is envisaging spending only around Rs 14,000 crore over five years, i.e., around 2,800 crore per year.
But what it received is just Rs 260 crore in the 2023-24 budget in revised estimates. The latest budget speech is silent on the allocation. It is also not clear from the speech if the corpus of Rs 1 lakh crore will be given to NRF to lend it for the research projects. The number of universities, IITs, IIMs, IIITs and AIIMSs have increased in the country in the last few years. The FM revealed new numbers in her budget speech, but scientists feel that the budget for them has not kept up with the growing number of institutes. In some cases, hardly 3 per cent of the approved funds had been actually allocated. While the concept of a new corpus is good and a welcome idea, the allocations for already established institutions need to be done to start their function properly.
While setting up the corpus is a positive step, spending a huge amount on R&D, the desired result or outcome is not seen and at one point the whole effort has to be given up. It is always easier for the private sector to do this while utilising their funds. But in a society like ours where funds are needed for several programmes for the poor and needy, public funds are scrutinised with a magnifying glass and hence failures are looked upon suspiciously. How the government balances the risk allowance and risk aversion, will truly be a test and also guide several such efforts in the future for promoting R&D.