CHENNAI: The union government plans to set up a corpus of Rs 1 lakh crore to finance private sector research and development, finance minister Nirmala Sitharaman announced on Thursday in the interim budget for the 2024–25 financial year.
The corpus will provide long-term financing or refinancing with long tenors and low or zero interest rates. “This will encourage the private sector to scale up research and innovation significantly in these domains. We need to have programmes that combine the powers of our youth and technology,” she said in the budget speech.
A new scheme for strengthening deep-tech technologies working in the defence sector was announced. It is aimed at speeding up the indigenization drive in the defence sector, or ‘Atmanirbharta’.
The new age of technologies and data are changing the lives of people and businesses and enabling new economic opportunities, she said, adding that it will be a golden era for our tech-savvy youth.
These schemes address the criticism that India is relying too much on low-skilled, low-value manufacturing jobs without building the capabilities to develop an innovation and research ecosystem. However, outlays for major science and innovation schemes are underutilised as per revised estimates for the 2023–24 financial year (FY24).
The 'ScienceSciencechnology Institutional and Human Capacity Building’ scheme was allocated Rs 1068 crores in the budget, and the revised estimates 24 put the outlay nearly half at Rs 500 crores. The budget estimates for the scheme in the upcoming 2024–25 fiscal year (FY25) are also lowered to Rs 900 crore. The 'Innovation,Innovationy Development, and Deployment’ scheme outlay has been revised to Rs 200 crores for FY24 from Rs 500 crores of the budgetary estimates. For 2024–25, the scheme has been allocated Rs 537 crore.
‘Biotechnology Research and Development’ revised estimates stood at Rs 500 crore against the budgeted amount of Rs 1345 crore. For the upcoming fiscal year, it has been slashed to Rs 1100 crore. ‘National Mission on Interdisciplinary Cyber Physical Systems’ expenditure as per revised estimates stood at Rs 435 crores against budget estimates of Rs 580 crore. The Capacity Building and Skill Development Scheme’s outlay has not fully been used in FY24. The estimation for the next year remained the same at Rs 538 crore without an increase.
The outlay for Centre's research and development projects stood at Rs 1178 crore against Rs 840 crore. The estimates for FY25 is Rs 1200 crore. The research and development outlay listed under major schemes also has slightly better figures with Rs 12943 crore in RE as against planned Rs 12850 crore.
India’s expenditure of research and development as a percent of gross domestic product (R&D expenditure as % of GDP) has been steadily declining since 2008 and currently stands at 0.65 as of 2020, data by UNESCO Institute for Statistics show.
Meanwhile, allocations to the production-linked incentive (PLI) to the manufacturing sectors, including automobiles, pharmaceuticals, and electronics, have jumped significantly.
Experts such as former Reserve Bank of India governor Raghuram Rajan said India’s vision of becoming a developed country by 2047 is not possible, even at a 7% GDP growth rate, and emphasised the need to spend more on education and research.