The Planning Commission is expected to give a formal clearance for the disbursal of the Rs.150 crore R&D fund proposed in the Union Budget 2000-01.The fund will be managed by the Department of Science and Technology and R&D based pharma units will be entitle for the allocation.

According to senior DST officials, the clearance is likely to come before December 15, as there are no more hassles in the budgetary approval for the proposal which was announced in the Union Budget 2000-2001. The sources added that the Expenditure Finance Committee, an internal body constituted within the Department of Science and Technology to work out various finance schemes for the research and development projects, is already on the job to finalize the modus operandi to disburse the fund.

Though the delay in sanctioning the funds to the agency concerned has given rise to a feeling that the programme is likely to remain in paper for the current financial year, the DST sources said that the fund disbursement schemes would be announced within this calendar year. The DST officials said that most likely a different official infrastructure would be created under the DST to operate the Pharma R&D fund. However, the channel of finance is yet to be worked out, the sources said.

The government has announced a corpus amount of Rs 150 crore towards the Pharma R&D Fund last year. The accrued interest of the corpus amount was expected to be dispersed to the eligible companies as soft loan every year by DST as the agency to manage the funds through its existing Drugs & Pharmaceutical Research Programme (DPRP).

According to government sources, the funds are primarily meant for bigger companies while small and medium scale pharma sector will be asked to utilize the national research facilities set up by DST as part of its current DPRP. The fund will be distributed for drug development projects in the private sector as soft loans as well as grants depending on the risk profile of each R&D project. If a government laboratory is tied up to the project, the assistance is most likely to be in the form of a grant. The finance ministry could be asked for increasing the corpus size later, as the industry proves its absorption capacity.