Online Courses (English)
This just in:

State PCS

Daily Updates

Indian Economy

R&D Expenditure Ecosystem in India

  • 25 Jul 2019
  • 6 min read

The report titled “Research and Development (R&D) Expenditure Ecosystem” was also released during the global launch of Global Innovation Index (GII)–2019 by the Economic Advisory Council to the Prime Minister (EAC-PM).

  • The objectives of the report are:
    • To address the data gaps in compiling R&D data so that up to date data on R&D is available in order to reflect India’s true rank globally.
    • The second objective is to examine expenditure trends in various sectors and their shortcomings.
    • The final objective is to lay down the road map for achieving the desired target of R&D spend by the year 2022, i.e 2% of the GDP.

Economic Advisory Council to the Prime Minister

  • Economic Advisory Council to the Prime Minister (EAC-PM) is a non-constitutional, non-statutory, independent body constituted to give advice on economic and related issues to the Government of India, specifically to the Prime Minister.
  • As of July, 2019, the Council consists of: Dr. Bibek Debroy (Chairman), Shri Ratan P. Watal (Member Secretary), Dr. Rathin Roy (Part-Time Member), Dr. Ashima Goyal (Part-Time Member) and Dr. Shamika Ravi (Part-Time Member).
  • The terms of reference of EAC-PM are:
    • Analyzing any issue, economic or otherwise, referred to it by the Prime Minister and advising him thereon,
    • Addressing issues of macroeconomic importance and presenting views thereon to the Prime Minister.
      • These could be either suo-motu or on reference from the Prime Minister or anyone else.
      • It also includes attending to any other task as may be desired by the Prime Minister from time to time.


  • The growth in research and development (R&D) expenditure should be commensurate with the economy’s growth and should be targeted to reach at least 2% of the Gross Domestic Product (GDP) by 2022.
  • The line ministries at the Centre could be mandated to allocate a certain percentage of their budget for research and innovation for developing and deploying technologies as per the priorities of the respective ministries.
  • To stimulate private sector’s investment in R&D from current 0.35% of GDP, it is suggested that a minimum percentage of turn-over of the company may be invested in R&D by medium and large enterprises registered in India.
  • To help and keep the industry enthused to invest in R&D, the weighted deduction provisions on R&D investment should continue.
  • The states can partner Centre to jointly fund research and innovation programmes through socially designed Central Sponsored Schemes (CSS).
  • The report also pitched for creating 30 dedicated R&D Exports Hub and a corpus of Rs 5,000 crore for funding mega projects with cross cutting themes which are of national interest.


  • Investments in R&D are key inputs in economic growth. The impact of this is proven on productivity, exports, employment and capital formation.
  • India’s investment in R&D has shown a consistent increasing trend over the years.
    • However, as a fraction of GDP, it has remained constant at around 0.6% to 0.7%.
    • This is below the expenditure of countries like the US (2.8), China (2.1), Israel (4.3) and Korea (4.2).
  • Government expenditure, almost entirely the Central Government, is the driving force of R&D in India which is in contrast to the advanced countries where the private sector is the dominant and driving force of R&D spend.
    • There is a need for greater participation of State Governments and the private sector in overall R&D spending in India especially in application oriented research and technology development.
  • Earlier in 2018, the Prime Minister of India had underlined that there should be greater emphasis on collaborative R&D by the Central Public Sector Enterprises (CPSEs) with a focus on partnerships with Indian Institute of Technologies and Universities.
    • Consequently, one hundred fifty-four such innovation cells have been set up by CPSEs which will work on market oriented research.
    • From the year 2014-15 to 2017-18, there has been an increase of 116% in R&D spending by CPSEs.
    • CPSEs of the petroleum and power sector are the biggest spenders in R&D. Therefore, the need of the hour is that all CPSEs must come on board for higher spend on R&D.

Source: PIB

SMS Alerts

Please login or register to view note list


Please login or register to list article as bookmarked


Please login or register to make your note


Please login or register to list article as progressed


Please login or register to list article as bookmarked