By L Divya
With the commencement of the Budget session in the Parliament on January 29, 2021, the Economic survey 2020-21 was tabled by Finance Minister Nirmala Sitharaman. What caught my eyes was one of the key recommendations in the document about the need for innovation through more investments in the Research and Development (R&D) sector. Having worked in this sector for a brief period of time, I have witnessed some of the real challenges this sector particularly faces. The private sector has always been output driven, which is no wrong and the phrase very closely related to Research and Development is 'Trial and Error'. So basically, one has to repeatedly try until success is achieved. But the catch is -- success is not always guaranteed. So, the resources, time, and money invested can be all be a waste. To add to the problem there is also a lack of a conducive environment which is requisite for some real R&D to bear fruits. Owing to the dearth of field- training and practical knowledge imparted to the students.
The recommendations made by Chief Economic Advisor to the Government of India Krishnamurthy Subramanian in the Economic Survey 2020-21 is about the need to ‘significantly Increase’ the investment in R&D by the business sector. Economic Survey of India is an annual document by the Finance Ministry, it presents the view on the state of the economy of the country. The recommendations in the survey are not binding on the government, yet are very significant.
The burgeoning demand for testing kits and then SARS-CoV-2 Vaccine has given Indian businesses an opportunity to tap into their potential in R&D in various domains like Biotechnology, Pharmaceuticals, and even engineering. R&D leads to innovation and India has a long way to go when it comes to improving its performance in various indicators of innovation. According to the survey, the government contributes 56% of gross expenditure on R&D, which is three times the average contribution by governments of the top 10 economies. Whereas, the contribution from the business sector is much less towards gross expenditure on R&D (about 37%) compared to the businesses in each of the top 10 economies (68% on average). As the government sector is the major contributor to R&D, (which is not very encouraging) there is a lot of room for private investors to pitch in this area. Interestingly, ‘tax incentives’ for R&D are more liberal in India compared to the top 10 economies.
The bottom line is that the government has its heart in the right place. It is for the ‘private players’ to hear the ringing bells. Investment in R&D is the need of the hour and it can be achieved only when business sector shed their reluctance to make more investment in R&D as the time is right.
(Disclaimer: The opinions expressed in this article are those of the author. They do not reflect the views of India TV )