India’s dream of becoming a global research and development (R&D) hub is facing a funding crisis. As per the Reserve Bank of India’s ‘State Finances: A Study of Budgets’ report, the total funding for R&D in state budgets was a paltry 0.1% of Gross State Domestic Product (GSDP) between FY23 and FY25.
| Company | Value | Change | %Change |
|---|
The report looked at the R&D budget of 10 Indian states and Union Territories to conclude that their total expenditure was even lower than the national average of 0.64%.
Among the 10 states, Rajasthan’s R&D allocation stood at 0.42% of the GSDP in the FY25 Budget. Kerala was in second place, with its R&D expenditure at 0.28% of the state’s GDP. Moreover, Karnataka (0.07%) and Tamil Nadu (0.01%), which are among the top 5 wealthiest states, saw less than 0.1% of their GSDP allocated to R&D.
State-level funding was mainly routed to medical, health, family welfare, sanitation and agricultural research. However, there were spatial variations in R&D expenditure across the states & Union Territories. While health and education-related spending increased between FY21 and FY25, expenditure on agriculture-related research declined in the same period.
While the RBI report does not include all states, it highlights the sorry state of R&D funding at the state level.
Also read: Budget 2025: CII seeks priority sector lending reforms, outcome-based credit
“The idea of supporting research is largely missing at the state level in the absence of any mandate. State governments have never really prioritised research,” said Prof V Ramagopal Rao, Group Vice Chancellor, BITS-Pilani. He added that it is a big ask to expect state governments to fund R&D when many cannot manage state universities.
Even India’s R&D spending amounting to 0.64% of the total GDP pales in comparison to the global average of 2.6%. On the other hand, the United States and China spend about 3.5% and 2.4% of their GDPs, respectively, on R&D.
The lack of support at the state level has forced the Centre to do a lot of heavy lifting with respect to R&D funding. According to ‘Research and Development Statistics At A Glance 2022-23’, the Centre is responsible for over 43% of the total R&D funding in the country. State governments constitute less than 7% of the funding mix.
Nevertheless, things have been improving but at a less-than-ideal pace. As per the Department of Science & Technology’s estimates, India’s Gross Expenditure on R&D (GERD) more than doubled from ₹60,196.75 crore in 2010-11 to ₹1.27 lakh crore in 2020-21. On a per capita basis, it increased from $29.2 in 2007-08 to $42 in 2020–21.
According to Prof Rao, who won the coveted Shanti Swarup Bhatnagar Prize in 2004, the ‘Partnerships for Accelerated Innovation and Research’ (PAIR) scheme is an example of the Centre’s oversized involvement in R&D funding. The scheme links top-tier institutions with those having limited research capacities.
“The Centre wants to use this hub-and-spoke model to encourage R&D at the state level after realising that state governments are not doing much,” he said.
Prof Rao argued that state governments will start taking R&D funding seriously if NITI Aayog comes up with a ranking system. He added that co-funded initiatives involving both the Centre and the states could help the latter improve their share in R&D funding.
Also read: Nirmala Sitharman’s pre-budget meeting: What states want from the FM
