India's spending on R&D reduces against rising per capita income

CEA Subramanian bats for private push in research

India’s spending on research and development as a percentage of gross domestic product fell against a rising per capita income in recent years, contrary to China and select advanced economies in comparison, the analysis presented in the economic survey has demonstrated. 

India spent only 0.7 per cent of its GDP on R&D in 2016-17, got only a fifth of its filed patents granted in 2016 and filed only six patents per million people. 

Though R&D spending in India (per cent of GDP) grew faster than China at a time when their per capita incomes were comparable, China’s spending rate outpaced India’s when the former’s income levels rose. 

This reinforces the direct relationship between improved incomes and scientific prowess when we consider this fact: private funding has contributed to scientific progress more than government efforts in advanced economies. 

Comparing India with China, Israel, South Korea, Japan and the United States, the survey has found India as an outlier in the pattern of R&D funding: while R&D spend in India is led by the government, that in the countries in comparison has been led by private investment. 

The economic survey for the financial year 2017-18 was tabled in the parliament by chief economic advisor Arvind Subramanian on January 29, 2017. While it proposed better private-government coordination, it also laid down potential missions on subjects like dark matter, genomics and cyber-physical systems.

Corporates in China spent $286 billion in 2015 on R&D, comparable to $ 341 billion by counterparts in the US. India corporates spent a mere $17 billion (Chart 1).

Though India ranks sixth in global scientific publications, the survey quotes a study to note that promotion in research jobs acts as an incentive rather than the research objective. It also notes India’s lag compared to China, specifically in the period that saw the economic boom. 

“If journal publications reflect a country’s prowess in science, patents reflect its standing in technology”, the survey said. 

In terms of patents applications filed, India and China were comparably negligible in front of the advanced economies prior to 1990. While China filed twice the number of patents as that of India, India led in the number of patents granted (Chart 2). 

China eventually took the lead in the 1990s and India’s contribution became increasingly negligible in the 2000s and more so in recent years. 

Comparing the Asian giants with the four advanced economies the survey mentions, India has just about 6 patents filed per million population, compared to China’s 296, Israel’s 617 and USA’s 950. South Korea tops with more than 2000 patents filed per million people (Chart 3). 

However, India improved its rate of patents granted in recent years, from 10% of the patent applications granted in 2012, to 18 per cent of patents granted in 2016. In these terms, Israel showed a phenomenal growth from 50% in 2012 to 77 per cent in 2016. 

About a third of filed patents get granted status in China, as opposed to less than a fifth in India (Chart 4). 

India still spends at a rate one-third of that of China in terms of R&D spending as a percentage of GDP: 0.6 per cent of GDP in India, as against China’s 2.1 per cent (2015). Israel’s 4.3 per cent and Republic of Korea’s 4.2 per cent are sourced from private funding, which forms more than 75 per cent of their total R&D expenditure. 

In India, businesses constitute less than 50 per cent of research spending, and though the growth in recent years looks promising—from Rs 60 billion in 2004-05 to Rs 440 billion in 2016-17—it is over an extremely low base. 

Though government constitutes the biggest pie in financing research, the growth in spending has been stagnant in the post-crisis years. The total spending by principal government agencies—which includes DRDO which gets the most money, along with departments of space and atomic energy—grew only 25 per cent in five years, from Rs 273 billion on 2010-11 to Rs 350 billion in 2014-15.