The announcement of plans for a new National Research Foundation (NRF), meant to replace the Science and Engineering Research Board (SERB) that was created in 2008, has generated excitement and debate. The NRF proposal has its origins in a 2019 report requested by the Prime Minister regarding India’s lagging performance in research spending, quality of research papers, patents, and university-based research.
Innovation is the driver of long-run growth, and the world is at a critical juncture in terms of adapting to climate change, so greater focus on research certainly makes sense. But what has to be done to make a real difference in India’s innovation performance? Before one evaluates the institutional aspects of the plan, what do the numbers tell us?
India’s GDP is $3.75 trillion. Its Research and Development (R&D) spending is 0.65% of that, or about $25 billion. The NRF plan envisages spending $6 billion over five years, or $1.2 billion a year. This is only a 5% increase in the R&D total, although the latter includes spending that is broader than the more basic research that the NRF will presumably fund. The net increase may be smaller, however, to the extent that the SERB already allocates money for research. The SERB is under the Department of Science and Technology (DST), itself part of the ministry of science and technology. That ministry has a budget of about $1.8 billion, with less than half going to the DST. In addition, the NRF proposal envisages 70% of the funds coming from the private sector, implying the government will contribute only $0.4 billion per year. If the SERB is spending anything close to that amount out of the DST budget of about $0.75 billion, then the net increase in government spending on research may be very small under this plan. Note that the Indian government spends about $550 billion, so the planned increase in research spending is not even a significant percentage of government spending.
These numbers suggest that one should not get too excited about the NRF. It may not have a funding commitment at a level that will really make a difference. This is completely aside from the concerns that have been expressed. One is whether the corporate money will be forthcoming. Another is with respect to political interference. A third concern is whether a centralised bureaucracy can allocate research funds efficiently and effectively. All of these are legitimate points that need to be examined and addressed. To the extent that the SERB and DST are already subject to the second and third of these concerns, the new institutions may be no worse, if no better.
Suppose that the corporate money does come in. The NRF budget will be about one-seventh of that of the US National Science Foundation (NSF), supposedly the model for the NRF. That ratio is about the same as that of India’s GDP to US GDP. But the US government spends much more than what goes through the NSF. The National Institutes of Health, and the departments (equivalent to ministries in India) of defense and energy have large and active research programs. The key point, however, is that US universities are awash with global talent, and have sophisticated organisations to manage funding from government and private sources. Indeed, in the US, private money does not need to round trip through the government to end up in university research. Government grants in the US also involve bureaucracy and even political factors in choices of areas that get funded. But US universities have become research factories. While the NSF was created in 1950, this development in US universities started with the influx of human capital from Europe as Hitler terrorised that continent.
From this perspective, the place to begin building India’s research and innovation capabilities is not in any reorganisation of the government’s funding of research. An NRF that is a little more independent than the SERB, and has a little more funding, is not a bad thing. But it makes far more sense to build research capabilities at India’s universities. To take one example, the now-famous IITs were founded from 1951 to 1961. The number stayed at five until 1995, and at seven until 2008. There are now 23 IITs, but most of the new ones have barely established themselves. Human capital and organisational capital are sorely lacking. Directly bringing in private funding for researchers, research managers, and labs and equipment, and letting individual institutions develop would be more efficient and effective than the NRF plan for private money.
If there are concerns about whether the money would be used well, foreign partners can be brought in, just as they were for the original IITs. Even the original five IITs can be incentivised to partner with newer ones and help to grow them. Combining cooperation and competition is not easy, but it can be done, and research consortia among universities are becoming more and more common, as research becomes more complex.
A university-centred model of enhancing research capabilities is at least as needed as an institutional redesign at the central government level, and probably more so. Indeed, the two ideas can be combined, so that private money goes directly to universities, perhaps incentivised through government matching, rather than forcing it to a round trip through a central bureaucracy.
The author is professor of economics, University of California, Santa Cruz