Why allocation of ₹1 Lac Crore @ Research & Innovative Fund @Indian Budget FY 23-24 matters ???

Context : GOI has allocated a corpus of ₹1 lakh crore with 50-year interest free loan to provide long-term financing or re-financing with long tenors and low or nil interest rates.

Objective/Sectors covered: Boost private players to scale up research & innovation in sunrise domains like - cyberspace, defence, drone, Quantum, Responsible AI, ICT, Start-up Ecosystem, Digital Public Goods and many more.

In an era of Minimum Government & Maximum Governance, the onus of providing safe, secure, competitive & equitable opportunities lies primarily on the Government. The incumbent decade of 2014-2024 depicts this sea change on the part of both the Government & those Governed.

Government & Governability are two different things. You may form a government but stay poor on the parameters of Governability. Governability is the ability & the capacity to govern over the dynamic demands of a set of population.

Among many pillars of this "Governability" is the Financial Administration of the government. Arthashastra, written by Kautilya, back in 300 BC, has highlighted the same. To summarise : " All Administration is Finance". That is, Finance is the bedrock of Sound Governance.

We have a global benchmark in terms of GDP to measure a nation's fiscal health in terms of broad macro-economic parameters, viz - per capita income, Tax/Debt to GDP ratio , Inflation , Forex reserves, etc.

This GDP comprises primarily of : Consumption(60%), Investment(30%) & Net Exports (10%).

This 1 lac Crore will augment all the three sections, namely :

1. Consumption led economy : One of our biggest strength is our 140 Cr. Population. We being 17% of the mankind, can ourself be a self sustaining market of all kind. To tap this huge potential we need to come up with innovative products of all kind right from FMCG, financial services, banking, etc.

2. Boost Investment: The recent tsunami of emerging startups and unicorns augmented with highest capex 11 Lac. Cr. from gov. side will drive the wheels of economy in foreseeable future. This innovation corpus will assist in building resilient startups without getting into the hunky dory valuation attestations which compromises onto the intended social impact. This will prevent Startup flipping away towards the foreign investors. PAYTM fiasco vis a vis Soft bank funding is a case in point.

3. Consistent Exports : The corpus will also ensure in building competitive products and services. The diversification of semiconductor saga, defence exports and China+1 strategy are the opportunities to bolster the same.

   
   

                    Though the overall picture seems quite optimistic, yet need to focus simultaneously on below apprehensions:

1. Skilling, re-skilling & up-skilling the workforce, since as per the Indian skills report, just around 50% of the people are employable in the current industrial setup.

2. Building capacities of the institutions at the centre and state level to ensure 100% resource utilisation of the corpus.

3. Continuous monitoring over the allocation of funds and ensuring inter ministerial coordination.

4. Involving all the stakeholders into the decision making like - CII,ASSOCHAM,FICCI & SIAM.

5. Improving the ICOR ( input capital output ratio ) through performance audits, transparent corporate governance & facilitative regulatory oversight.

6. Targeted allocation of funds (from the corpus) domain-wise over a period of time till a basic maturity is achieved.

7. Smooth transition of such domain into market place for further funds and growth opportunity along with the necessary safeguards.( investor rules, SEBI & RBI guidelines)

8. Addition of the new domains into the list for the corpus and continuous upgradation thereby. The funds allocated should be continued in successive budgets till 2047.

This will propel our journey to achieve the feat of 3rd largest economy by 2028 & VIKSIT BHARAT by 2047.

# Pictorial Representation of the context :