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Business Standard
04-07-2025
- Business
- Business Standard
Best of BS Opinion: University-level funding key to India's R&D targets
Hello, and welcome to the Best of BS Opinion, our daily roundup of the day's opinion page. The Research Development and Innovation (RDI) Scheme, which the government announced earlier this week, is an acceptance of the fact that policymakers must find ways to spark innovation and support it with funding. However, a lot will need to be done considering the scheme may not address key concerns about India's research and development (R&D), posits our first editorial. India spends less than 1 per cent of its gross domestic product (GDP) on R&D, compared to 2.5 per cent for both China and South Korea. It has a vast pool of tech graduates, but many migrate abroad or find employment in skill-mismatched roles. Not surprisingly. India ranks 39th on the Global Innovation Index, which is way below its potential. Meanwhile, the US and Japan have had programmes that, along with research institutions and universities, did 'bluesky' fundamental research across many disciplines. In comparison, India lacks both private corporate funding for R&D, as well as funding for such R&D at the university level. RDI may address some of the concerns about private sector research but India must also need to figure out how to channel funding efficiently into fundamental bluesky research in universities and other research organisations. The rise of artificial intelligence, fake news, and deep-fakes pose a clear and present danger to social order and democratic integrity, notes our second editorial. Tackling it will need a careful balance between regulation and free speech principles. In this context, the Karnataka government's draft Bill that allows for jail of up to seven years for fake news and other problematic content is a symbol of legislative over-reach and likely to have a chilling impact on free expression. Given India's biggest constraint in terms of development is bureaucratic and regulatory capacity, it is unfortunate that an increasing amount of this scarce commodity is diverted to channel, influence or restrict the freedom of expression in the country. Unfortunately, authorities in India at all levels have become far too engaged with imposing restrictions on speech. The Union government, too, has at various points amended the Information Technology Rules to give itself broader powers to restrict online platforms. In such an scenario, India's governments must step back and re-examine their approach. The current account deficit poses little concern amid global volatility, but its financing requires close monitoring, write Dharmakirti Joshi and Adhish Verma. Last financial year, India's current account deficit (CAD) came in at a benign 0.6 per cent of gross domestic product (GDP), because both the services trade and secondary income accounts saw a higher surplus. Such low reliance on external financing of CAD is a buffer against volatility in capital flows and attendant currency swings. Meanwhile, S&P Global expects world GDP growth to slow to 2.9 per cent in 2025; this will clearly adversely impact India's exports, even as healthy domestic growth, expected at 6.5 per cent, will support imports. Is that cause for worry for India's current account? Not so much — yet. India's CAD may face marginal pressure this fiscal, but there are no big worries. However, its financing needs monitoring, given volatile foreign capital flows in the light of global uncertainty. However, with comfortable foreign exchange reserves and the expectation of only a marginal rise in CAD, India is in a good position to weather global volatility. The Reserve Bank of India's (RBI's) recent guidelines which cut provisioning requirement on project finance to one per cent from five per cent have been welcomed by most parties. While the RBI has avoided a short-term slowdown in economic activity, our second columnist Prasanna Tantri questions whether these guidelines are a net positive from a long-term point of view. Unfortunately, he writes, the RBI circular does not distinguish between liquidity shocks and fundamental shocks, allowing lenders to extend the date of commencement of commercial operations (DCCO) without recognising NPAs even when the reason for the delay is not a liquidity shock. Extending the same concessions when the reason for delay lies with management could lead to misuse and be socially harmful. Lenders can be asked to have a policy of identifying liquidity shocks and institute a process where the DCCO is extended only after evidence that the delay is due to such shocks. Kuldeep Yadav's Dial 100: Tough Cases, Tougher Policemen Kirpal. The author, who is an actor, fimmaker, and former Naval officer, makes sure to remind readers how to keep themselves safe and watch for dangerous warning signals. The language in the book is straightforward jargon-free, likely because Yadav has also been a screenwriter. Ironically, though, he finds that several criminals learn a lot by just watching B-grade films, particularly those with outlandish and imaginative methods of committing a crime.
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Business Standard
03-07-2025
- Business
- Business Standard
India's current account deficit manageable, but financing needs monitoring
Dharmakirti Joshi Adhish Verma Listen to This Article Last financial year, India's current account deficit (CAD) printed at a non-worrisome 0.6 per cent of gross domestic product (GDP), driven by healthy net invisible receipts. It was a whit lower than 0.7 per cent in 2023-24, despite the goods trade deficit rising to 7.3 per cent of GDP from 6.7 per cent. This happened because both the services trade and secondary income accounts saw a higher surplus, which more than offset the deterioration in the goods trade deficit. Such low reliance on external financing of CAD is a buffer against volatility in capital flows and the attendant currency swings
