No Jugaad! Boost research and development spend, says Economic Survey

The Economic Survey 2021 has highlighted the significance of private investments in research and development (R&D). The business sector in India contributes about 37 per cent to gross expenditure on R&D, almost half compared to businesses in the top ten economies (68 per cent on average). "This is despite the fact the tax incentives for R&D were more liberal in India when compared to those in the top ten economies," the survey revealed.

In spite of all the heavy lifting on R&D by the government, with 56 per cent share, which is three times the average contributed by governments in the top ten economies, India's gross expenditure on R&D as a per cent of GDP remains low at 0.65 compared to 1.5-3 per cent for the pack. This is primarily due to the disproportionately lower contribution from the business sector.

"India must significantly ramp up investment in R&D if it is to achieve its aspiration to emerge as the third largest economy in terms of GDP current US$. Mere reliance on "Jugaad innovation" risks missing the crucial opportunity to innovate our way into the future. This requires a major thrust on R&D by the business sector," the survey said. The survey urges India's resident firms to increase their share in total patents. "India must also focus on strengthening institutions and business sophistication to improve its performance on innovation outputs," it adds.

Indian residents contribute only 36 per cent of patents filed in India as compared to 62 per cent on average in the top ten economies -- their performance is also below expectations on innovations, for their level of access to equity finance, which is crucial for innovation, the survey said.

Also Read: Economic Survey lays down ground rules for RBI to end COVID-19 forbearance policies

Also Read: Oops! Economy grew even slower at 4% in FY20

Also Read: Eco Survey invents Bare Necessities Index; says BNI shows better housing, water, sanitation, hygiene