Research and development expenditure in private corporate business sector - possible treatment in national accounts statistics

Research and Development (R&D) expenditure is now recognized as capital formation instead of intermediate consumption, in the System of National Accounts (SNA), 2008. In the light of this, the paper presents the concepts and definitions involved in R&D expenditure along with how this expenditure is accounted in company's accounts. The paper also discusses the effect of recognizing R&D expenditure as capital formation in company's balance sheet, profit and loss account. It is observed that R&D spend in India is becoming one of the critical driver for both growth and employment in a sustained manner; therefore, has become necessary to account for the increasingly sizable portion of R& D spends as investment expenditure.