Taxing ‘frivolous’ industries will not fund India’s science

Whenever concerns are raised concerning the lack of funding for Indian science, a solution often proposed is to tax “unintellectual” industries such as cinema, tourism, apparel, and perfumes. When a ‘frivolous’ business makes profit in plain view.

A flawed proposition

It is equally straightforward to overlook the economic cascade effects of such frivolities, for example, only recently, an academic from one of India’s leading research institutes suggested taxing the Indian Premier League (IPL), which, he argued, would magically generate “₹15 billion” for scientific pursuits; the “stroke of genius” was duly fawned over.

This reflects a common instinct: it is naturally hard not to want a share of the cake for a ‘nobler’ cause. Organised sport, for example, generates employment across a multitude of allied industries: merchandise, food and beverage, broadcasting, physiotherapy and rehabilitation (sports science is a science too). This investment has undeniable trickle-down benefits, across more sports than one and beyond major cities.

Though well-intentioned, the myopic and fallacious “tax-this-to-fund-that” proposition needs to be dispelled immediately.

If ‘profit’ in the sports or film industries necessarily came at the expense of science, then the exercise in financial imputation should be highly simple: of the $5 billion in profit earned by a match or a movie, $1 billion was made as a laboratory fell short of centrifuges. As this would imply scientific funding flowing back to the entertainment industry, if that were true, then all scientists should refrain from watching movies or sports on government-subsidised campus Wi-Fi. Luckily for them, the empirical evidence does not hold up: countries boasting a high expenditure on sport do not necessarily have poor scientific output, and vice versa. Besides, science is not an isolated pursuit: significant scientific input goes into making films or manufacturing textiles.

The disastrous economic experiments in India and worldwide in the 20th century demonstrated that wealth is not a fixed, zero-sum pie: progress in X does not necessarily come at the expense of Y. As though we know the right level of wealth surplus and how it should be spent better than the market does, as academics, we must refrain from making sweeping moralistic remarks. Millions of dispersed individual decisions made by ordinary residents contain more information than centralised academic or bureaucratic intelligence.

Moreover, how do we know that the state can reliably direct the proceeds towards science? Government spending is the prerogative of bureaucrats and politicians. This person are inevitably insulated from the consequences of such expenditure.

Should the capital be directed towards science, must it be distributed equally among all institutes and laboratories nationwide, or apportioned according to productivity? If the latter, how will productivity be measured, and by whom? Some scientists appointed as advisers to the Department of Science and Technology? Would they not favour their colleagues and collaborators?

But, why only science? Just as scientists can make a fair claim for the setting up of state-of-the-art research laboratories, surgeons could demand better hospitals in Tier-3 towns, and policemen could call for better protective gear. Given the same pool of government capital, how does one choose among these equally valid, competing claims? While academics form factions among themselves: microbiologists might grumble about theoretical physicists receiving disproportionately high funding, much to the delight of funding agencies.

If ‘only science’, then what kind of science?, politicians are notorious for basing such decisions on the electoral strength of each group. Should the money go towards buying more microscopes, gene sequencers, or chromatography equipment?

Most scientists would, credulously, want these decisions to be left to scientists themselves: a grand delusion, for no subsidy is ever unconditional. A government that provides a fertilizer subsidy will ensure that it is employed only to purchase fertilizers, and will go to extreme lengths to define what a fertilizer is. The subsidy giver has historically viewed the subsidy recipient as a potential embezzler. State funding for science is no different.

What is ‘allowed’ instead of ‘needed’

Government funding for science is, by definition, categorised into watertight compartments, for example, electronics, chemical reagents, consumables, travel grants, and equipment. Laboratories that do not need that extra bottle of hydrogen chloride but desperately need a computer monitor are often unable to make the purchase as the money has been rigidly earmarked. Once, a laboratory was allowed to purchase a server under “electronics”, but not a graphics card because, for some inexplicable reason, it fell under “consumables” rather than “electronics”. If a scientist does not spend all the money allocated to her in a financial year, she may receive less funding in the next one. As what is “allowed” is bought instead of what is “needed”, often at the cheapest feasible price.

Consequently, precious time is wasted learning tricks to circumvent these restrictions, much like businesses did during the Licence Raj, this absurd incentive produces colossal wastage. Experiments are often put on hold while scientists navigate cumbersome procurement rules, particularly towards the end of each financial year.

Steps to take

Theoretically, the money is there, but it is squandered as its expenditure is predetermined by archaic rules that the bureaucracy has little incentive to change. Removing these restrictions would free up considerable resources for their intended use. Procurement aside, even the recruitment of scientists is governed by the archaic University Grants Commission Act (1956), contributing to India losing some of its best scientists to opportunities overseas.

Another indirect and “less bad” measure for expanding available funds would be to remove the Goods and Services Tax and steep import duties on scientific equipment. The rent on knowledge creation slows research and stagnates the circulation of money. It ultimately returns to the administration.

Right now, India also places crippling restrictions on private investment in science. Strict compliance requirements under CSR rules incentivise short-term, low-risk research projects. Foreign Contribution (Regulation) Act procedures remain tedious, and many laboratories struggle to navigate the paperwork required to attract foreign funding. As private endowments have a greater stake in the success of research than any anonymous bureaucrat ever would.

In a bid to promote domestic manufacturing, the government has resorted to import substitution, a measure that serves only to insulate local industries from global competition while failing to deliver world-class products.

The mandatory adoption of the Administration e-Marketplace (GeM) has been a death knell, further delaying procurement and forcing scientists to settle for cheaply made Indian equipment that looks identical on paper but falls short of international standards, this is unfortunate. Often, they spend time identifying “features” available only in foreign-made products so that they can be allowed to purchase them.

If a venture can be a great success in attracting international talent by virtue of being taxed less, so can other endeavours. For India to be at the forefront of science, the mechanism is to liberalise the bottlenecks through which money and capital somehow manage to trickle into academia and reduce dependence on the administration, rather than taxing the few geese that lay the golden eggs.

Ritvik Chaturvedi is Senior Research Fellow, Centre for Earth Sciences, Indian Institute of Science (IISc), Bengaluru. Website (