Explained: Why India Needs More Money in R&D

Context

Probable Question

For India to evolve into a self-reliant economy, the importance of investment in research and development (R&D) is critical for its development. Analyze (10 marks, 150 words) 

Innovation in India

• To emphasize the importance of Innovation as an engine for economic growth, Prime Minister Narendra Modi extended the old slogan of Lal Bahadur Shastri and Atal Bihari Vajpayee, jai jawan, jai kisan, jai vigyan, to include jai anusandhan (research and innovation). 
• In 2016, the Atal Innovation Mission (AIM) was launched to create an ecosystem to promote innovation and entrepreneurship in the country. 
• The Sustainable Development Growth Target 9.5 calls upon nations to encourage innovation and substantially increase the numbers of researchers as well as public and private spending on R&D. 
• India lags behind many G20 countries in R&D expenditure as it spent only $17.6 billion in 2018 on R&D.

Scenario of Global Investment in Research and Development

• According to UNESCO’s Institute for Statistics (UIS) latest report, the G20 nations accounted for 90.6 percent of global GERD (current, PPP$) in 2018.
• Global R&D expenditure has reached a record high of about 2.2 trillion current PPP$ (2018), while Research Intensity (R&D expenditure as a percentage of GDP) has gradually increased from 1.43 per cent in 1998 to 1.72 per cent in 2018.
• Investment in R&D by G20 countries: The US leads the G20 by spending $581.6 billion on R&D followed by the European Union ($323 billion), and China ($297.3 billion) in 2018. 
• In terms of their relative shares in G20 R&D expenditure, the US is way ahead with 36 per cent, followed by the EU (20 percent), and China (18 per cent). India’s share is less than 1 percent of G20 R&D expenditure in dollar terms.

Research intensity (RI)

• The absolute expenditure on R&D provides a sense of scale, while their percentage to the respective GDP provides the research intensity (RI). 
• In 2018, South Korea had the highest RI at 4.43 per cent, followed by Japan (3.21 per cent), Germany (3.09 per cent), and the US (2.83 per cent).
• Among the G20 countries, India has been ranked 17th, with a RI of 0.65 per cent.
• Israel (a non-G20 country), though a small country with relatively small absolute expenditure on R&D, has a higher RI than even the countries in the G20 (over 5 per cent). 

Way Forward

• India needs to repurpose its massive expenditures on various subsidies (“revdi” culture) such as on food, fertilizers, PM Kisan, free power, and even the PLI scheme for manufacturing towards a multi-fold increase in expenditure on research and innovation.
• The government can play an important role in financing innovation, particularly in SMEs, and in providing well-functioning frameworks for innovation, such as venture capital (VC), incubators, strong science-industry links, and high-quality university education.
• There is a need to increase budgetary allocation towards R &D. 
• Schemes like Make in India and Atma Nirbhar Bharat need to be properly implemented.
• Government-Industry-Academia partnership should be promoted to support the R&D ecosystem in India.