INDIA’S R&D EXPENDITURE AS A PERCENTAGE OF GDP

Recently, in the 99^th Indian Science Congress (ISC), Prime Minister of India Dr. Manmohan Singh said that “Over the past few decades, India's relative position in the world of science had been declining and we have been overtaken by countries like China." The prime minister also emphasised the need for increasing spending in the science sector. "As far as resources are concerned, the fraction of GDP spent on research and development in India has been too low and stagnant. We must aim to increase the total R&D spending as a percentage of GDP to 2% by the end of the 12th Plan Period from the current level of about 0.9%,"

Prime Ministers announced the Six Key Objectives of S&T for the Twelfth Five Year Plan. Yesterday (04.01.2012), one of Senior Official of the Government of India said in an interview that it’s good that PM had announced 2% of GDP for R&D. He also stated that “India is spending only 0.8% of GDP whereas Germany is spending nearly 6-8% of GDP and most of the developed nations are spending more than 4% of their GDP on R&D”.

My reflection

After hearing the Interview, I got perplexed on the figure of expenditure as a percentage of GDP; which resulted in small research on R&D expenditure as a percentage of GDP. No doubt, India is spending only 0.80% of GDP; but what about the remaining countries. Here is what I found, as per world bank, India spends 0.80%, Germany spends 2.54% of their GDP, France spends 2.04%, USA spends 2.72% of their GDP, UK spends 1.82% of their GDP, China spends 1.44% of GDP, Brazil spends 1.10%, South Africa 0.93% and Russian Federation spends 1.12% of their GDPs.

The Senior Government official should be  little careful and also should have done some research before making such a public statement. India is trying its level best to do good in R&D, here are the few budget measures which was announced during last year budget speech: 

1. To further encourage R&D across all sectors of the economy, weighted deduction on expenditure incurred was enhanced from 150 per cent to 200 per cent.
2. Weighted deduction on payments made to National Laboratories, Universities or IITs or a specified person, with a specific direction that the said sum shall be used for scientific research undertaken under an approved programme was also enhanced from 125 per cent to 175 per cent.
3. Payments made to associations engaged in research were allowed as weighted deduction of 175 per cent. The income of such approved research associations shall also be exempt from tax.

   Despite these measures, India spends very less on R&D even among the BRICS nations. India is still lacking behind among BRICS nations which is really a concern because even the small BRICS nation like South Africa and Brazil are spending more than what INDIA does. Even though, India is slowly emerging as one of the focused  R&D  place across the globe it still needs to go a long way to become real R&D hub.