PLI has disbursed roughly 15 per cent of its ₹1.97 lakh crore outlay; FAME I closed at 60 per cent utilisation, FAME II at 69. The schemes were not under-financed. They were over-engineered for caution. India deploys risk capital through institutional architecture designed to eliminate risk, and the sanction-to-disbursement distance is what that contradiction looks like in operation. Why does it persist, and what would different plumbing actually look like?
The distance between a sanctioned fund and a realised outcome is one of the most revealing institutional patterns in how India governs, and no easy answer exists for why it persists. The common architecture across every major industrial scheme, whether the semiconductor programme, ECMS, PLI, FAME, or the RDI scheme, is the committee-driven, compliance-heavy pipeline through which India deploys capital. The pattern is visible across schemes. Faster Adoption and Manufacturing of Electric Vehicles (FAME) I left 40% of its outlay unspent. FAME II utilised 69%. Production Linked Incentive (PLI) has disbursed roughly 15% of its ₹1.97 lakh crore outlay. The RDI scheme's ₹1 lakh crore is structured as a fund of funds that has not yet deployed at scale.
India's R&D expenditure has remained at 0.64% of GDP for over twenty years; not because the government hasn't sanctioned money, but because something between the sanction and the outcome consistently fails. That something is the architecture. The fundamental contradiction is that India deploys risk capital through risk-eliminating architecture. Risk capital, by definition, requires speed, conviction, and tolerance for loss. That is what makes it risk capital.
But India's institutional machinery is designed for the opposite: caution, consensus, and zero tolerance for setbacks. When these two logics meet, the machinery wins. The capital sits.
When India borrows the ambition of the American and Chinese models, large funds, sunrise sectors, technology frontiers, and runs it through its administrative plumbing, the plumbing constrains the ambition. The capital enters the system bold. It exits the system cautious. The architecture in between is where the transformation happens.
Committees, councils, empowered groups, and governing boards form around every major fund. The RDI scheme alone involves the Anusandhan National Research Foundation (ANRF) governing board (chaired by the Prime Minister), a Special Purpose Fund management structure, an empowered group of secretaries for oversight, and then the second-level fund managers with their own investment committees, compliance teams, and risk frameworks.
Six to seven layers stand between Cabinet intent and the entrepreneur receiving money.
This is not incompetence. It is rational behaviour within a system that punishes individual decision-making. An officer who signs off on a ₹500 crore deployment personally carries the risk of a Comptroller and Auditor General (CAG) audit observation, a CVC inquiry, or a parliamentary question, potentially years after the decision. If the project fails, that officer's name is on the file. But if a committee of twelve approved it, accountability is diffused. Nobody signed; the committee decided. Committees therefore exist in India not primarily to improve decision quality, but to distribute the consequences of decisions. The cost of this distribution is structural: committees systematically select against boldness. A bold proposal, by definition, will have at least one sceptic among twelve members. Since committees gravitate toward consensus, one raised concern can stall a decision.
What survives the committee process is not what excites anyone the most; it is what offends no one.
The Department of Expenditure has, over the last five years, built a specific reform architecture to address exactly this sanction-to-disbursement distance. The Single Nodal Agency Model, operationalised from 2021, requires every Centrally Sponsored Scheme to route through a single designated state-level bank account, replacing the earlier architecture of multiple implementing agencies with separate accounts and reconciliation. The Public Financial Management System, the digital infrastructure beneath the SNA Model, tracks every rupee from central release to final beneficiary in near real time, with dashboards visible simultaneously to the Department of Expenditure, the sponsoring ministry, and the state finance department. The architectural intent was specific: compress the fund-flow timeline, eliminate the float that earlier accumulated in multiple agency accounts, and create audit-grade visibility into every committed rupee. The institutional outcome has been genuine on that timeline: Centrally Sponsored Schemes that previously moved through multiple agency accounts with reconciliation friction now route through a single tracked pipeline. What the reform has not closed is the approval-side timeline. The SNA Model accelerates the disbursement journey from central release onward; it does not accelerate the Empowered Committee approval, the PMA verification, the Financial Advisor's concurrence, or the multi-layer appraisal that sits between scheme commitment and central release. The company waiting for its PLI disbursement experiences the reform as marginal, because the delay it carries sits upstream of the stage the reform addresses. The Department of Expenditure can modernise the plumbing where it has direct authority; it cannot modernise the appraisal culture in sponsoring ministries, the risk-aversion of individual officers, or the audit architecture that shapes both.
The fund assumes absorptive capacity that does not yet exist. The capacity assumes the fund. The money will either sit unspent, as it did in FAME I and FAME II, or flow to safe projects that yield compliance-ready reports but not capability.
A second discontinuity sits behind the architecture. Ministers and secretaries with original ownership of an industrial scheme typically rotate within two to four years; their successor inherits the programme but not the conviction. The programme drifts. India's semiconductor mission is in its third year. Continuity of institutional attention is what makes DARPA, ISRO, and China's national laboratories effective; it is structurally absent in India's general administrative architecture. ISRO is the counter-example: relative autonomy, long-tenure leadership, political protection across governments. It has had launch failures, mission failures, but the institution was allowed to fail, iterate, and learn, and the capability that emerged eventually yielded Chandrayaan and Mangalyaan. The system gave ISRO institutional room to fail. It does not extend the same room to most other technology programmes.
The Indian state has one administrative pipe: committee-reviewed, multi-layered, compliance-heavy. All capital, grant capital, subsidy capital, risk capital, is forced through it. The pipe works adequately for subsidies, where verification and compliance are appropriate. It works reasonably for performance-linked incentives in sectors with established players and proven models. It actively destroys the value of risk capital, which by nature requires a different architecture: fewer layers, faster cycles, individual conviction, and tolerance for honest setbacks. India's pharma PLI worked because the pharmaceutical industry already had manufacturing capability, regulatory knowledge, export infrastructure, and institutional muscle. The scheme accelerated something that already existed.
Semiconductor fabrication is slower because the capability is being built for the first time, and the compliance architecture treats the learning curve inherent in building new capability as evidence of a breakdown rather than as its precondition. The question is not whether India is allocating enough money. It is whether the institutional architecture between allocation and deployment is designed for the type of capital being deployed. Right now, it is not. And until the system recognises that risk capital requires risk-tolerant plumbing; fewer committees, faster deployment cycles, programme-level autonomy, and a distinction between corrupt misuse and honest setbacks in the audit framework; the distance between sanctioned intent and realised outcome will persist.
Closing this distance requires separating the institutional pipe for risk capital from the pipe for subsidies: fewer committees, faster deployment cycles, programme-level autonomy, and a distinction between corrupt misuse and honest setbacks in the audit framework. Until different types of capital flow through different types of institutional plumbing, sanctioned amounts will continue to overstate deployed capability.