The announcement of plans for a new National Research Foundation (NRF), which is intended to replace the Science and Engineering Research Board (SERB) that was established in 2008, has sparked interest and debate. The NRF proposal originates from a 2019 report requested by the Prime Minister regarding India's lagging performance in terms of research expenditure, quality of research papers, patents, and university research.
Innovation is the driver of long-term development, and the world is at a critical juncture in terms of adapting to climate change, so it makes perfect sense to place a greater emphasis on research. But what must be done to significantly improve India's innovation performance? Before evaluating the plan's institutional aspects, what do the numbers reveal?
The GDP of India is $3.75 trillion. It spends approximately $25 billion on Research and Development (R&D), which represents 0.65% of its total revenue. The NRF's expenditure plan calls for $6 billion over five years, or $1.2 billion annually. This represents a modest 5% increase in R&D spending, although this figure includes expenditures that are broader than the more fundamental research that the NRF will presumably finance. Insofar as the SERB already allocates funds for research, however, the net increase could be lesser. The SERB is subordinate to the Department of Science and Technology (DST), which is itself a division of the ministry of science and technology. This ministry has a budget of approximately $1.8 billion, less than half of which is allocated to the DST. In addition, the NRF proposal anticipates that 70% of the funds will come from the private sector, implying that the government will only contribute $0.4 billion annually. If the SERB is spending anything close to this amount from the DST's budget of approximately $0.75 billion, the net increase in government spending on research under this proposal may be minimal. Noting that the Indian government spends approximately $550 billion annually, the planned increase in research expenditure is not even a sizeable proportion of government spending.
These numbers indicate that one should not become overly enthusiastic about the NRF. It may not have a funding commitment that will make a significant difference. This has nothing to do with the concerns that have been raised. One is whether the money from the corporation will be forthcoming. A second relates to political interference. A third concern is whether a centralised bureaucracy can effectively and efficiently allocate funds for research. These are all valid concerns that must be examined and addressed. Insofar as the SERB and DST are already subject to the second and third of these concerns, it is possible that the new institutions will not be any worse, and may even be better.
Suppose that the corporate funds arrive. The NRF expenditure will be approximately one-seventh that of the US National Science Foundation (NSF), which is ostensibly the NRF's model. This ratio is comparable to that of India's GDP to the US GDP. However, the US government spends significantly more than the NSF. The National Institutes of Health, as well as the departments of defence and energy (equivalent to ministries in India), conduct extensive and active research. The essential point, however, is that universities in the United States are awash in international talent and have sophisticated organisations to manage government and private funding. In the United States, private funds do not need to pass through the government in order to fund university research. Government grants in the United States involve bureaucracy and even political considerations in the selection of funding recipients. But universities in the United States have become research enterprises. While the NSF was established in 1950, this development in American universities began with the influx of human capital from Europe during Hitler's reign of terror.
From this perspective, building India's research and innovation capabilities should not commence with a reorganisation of government research funding. A NRF that is somewhat more independent than the SERB and has slightly more funding would not be undesirable. However, it makes much more logic to develop research capabilities within India's universities. For instance, the now-famous IITs were founded between 1951 and 1961. Five remained the number until 1995, and seven until 2008. There are currently 23 IITs, but the majority of the newest ones are still establishing themselves. Human and organisational capital are severely deficient. Directly bringing in private funding for researchers, research managers, labs, and equipment, and allowing individual institutions to grow, would be more efficient and effective than the NRF's private funding proposal.
As was the case with the original IITs, foreign collaborators can be brought in if there are concerns about how the funds will be used. Even the original five IITs can be incentivized to form partnerships with newer institutions and assist in their growth. Combining cooperation and competition is not simple, but it is possible, and as research becomes more complex, university research consortia are becoming more prevalent.
A university-centered model for enhancing research capabilities is at least as necessary as a central government-level institutional redesign, and probably more so. In fact, the two concepts can be combined so that private funds go directly to universities, perhaps with government matching as an incentive, rather than being routed through a central bureaucracy.
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