Education takes a back seat

Despite a 5.16% increase in allocation for higher education, the budget fails to address the sector’s pressing needs

The Union Budget 2025 has been commended as a “significant step towards an inclusive and empowered India, aligned with the vision of Viksit Bharat 2047”. Overall, the allocation for higher education was raised by 5.16% over the 2024 budget estimates to Rs 50,077.95 crore.

The budget allocates Rs 20,000 crore to promote research, development and innovation driven by the private sector; it also provides Rs 500 crore for a Centre of Excellence in Artificial Intelligence for Education, aiming to incorporate AI-driven solutions into the educational sector.

Additionally, five National Centres of Excellence for Skilling, in collaboration with global institutions, are proposed to equip youth with skills for the ‘Make in India, Make for the World’ initiative. To foster technological research in IITs and IISc, 10,000 researchers have been promised improved financial support under the PM Research Fellowship Scheme.

Encouraged by the number of students in 23 IITs, which doubled from 65,000 to 1,35,000 over the past decade, the current budget seeks to enhance facilities in the five new IITs established after 2014, enabling them to accommodate 6,500 additional students.

The allocation for autonomous bodies in higher education has risen by 7.42% to Rs 42,732 crore. Central universities have been assured Rs 16,691 crore, an increase of 4.79% over the previous year.

The University Grants Commission (UGC) has received 33.44% more, raising its allocation to Rs 3,335.97 crore. The IITs have received Rs 11,349 crore, an increase of 9.92% compared to the previous budget.

The funding for NITs, Rs 5,687.47 crore, is 12.85% higher than the previous budget. The budget for IIMs, Rs 251.89 crore, reflects an 18.70% increase over the previous budget. IIITs will receive Rs 407 crore, indicating an increase of 28.83%.

Funding for deemed universities has also increased to Rs 604 crore, rising by Rs 8 crore (1.34%). Grants for promoting Indian languages have been raised to Rs 347.03 crore, up by 11.91%.

On the flip side, the allocation for world-class institutions, implemented as the Institutions of Eminence scheme, has been drastically reduced this year to Rs 475.12 crore, compared to the actual expenditure of Rs 1,436 crore in 2023-24.

The allocation for the UGC has increased this year, but only when compared to last year’s budget estimate. This year’s allocation, at Rs 3,335.97 crore, is merely about 62.65% of its actual expenditure in 2023-24.

Similarly, a significant proportion of the allocation to the centrally funded higher and technical institutions is meant to repay the Higher Education Funding Agency (HEFA) repayment of principal and interest thereon.

The 5.61% increase in the overall allocation for higher education over the last year is only marginal. Discounted for inflation, the Union government’s expenditure on higher education may have, in fact, decelerated over time in real terms. It is all the more disquieting that this year’s budget estimate is Rs 5,314.73 crore lower than the actual higher education expenditure in 2023-24.

The size of the Union Budget for 2025 has recorded a compound annual Growth Rate (CAGR) of 11.8% over the 2015 budget. In comparison, the growth rate of the budgeted expenditure on education has not surpassed 5.20%.

The allocation for education in budget 2025 is 0.35% of the GDP, compared to 0.55% in 2014-15. In a similar vein, the proportion of the total budget allocated to education has decreased from 4.16% in 2014-15 to a mere 2.25% this year.

Higher education, a component of the education budget, has been allocated considerably less—only 0.098% of the total budgeted expenditure in 2025. The education sector is receiving significantly less funding than it deserves and is also lacking in prioritisation.

Considering the need for expansion and quality enhancement, it may be insufficient to help the government fulfil its stated commitment to cultivate a future-ready workforce and promote world-class research and educational infrastructure.

The 2025 Union Budget is another missed opportunity for the education sector. It may not be quintessential for public funding of education when the nation holds the first quinquennial review of the National Education Policy (NEP 2020) in July.

The urgency of enhancing public investment in higher education is not evident in the present budget. A nation, whose 65% of the population is still below 35, must seize every opportunity to reap the demographic dividend. However, this window of opportunity is available to India for a limited time and may be closer than expected.

There is strong evidence that the beginning of the end is near. India’s demography is changing rather rapidly. The school-going age group population has already started declining, causing declining demand for elementary and, to some extent, even secondary-level education. In the course of time, senior secondary and higher education may also get afflicted.

There is an imminent danger that India will age before it becomes wealthy. This situation can be avoided only by urgently investing heavily in improving the quality and promoting excellence in higher education. A handful of the best institutions may not be enough, as they serve only a very small section of the population.

At the same time, the nation needs to mitigate the gap between the best and the rest to harness economic, social and strategic benefits. Pressure for global competitiveness further warrants benchmarking the standards of higher education institutions against the best in the world. These can be achieved only by urgently enhancing public investment in education.

(The writer is a former advisor for education in the Planning Commission and is is the chief advisor at Integral
University in Lucknow)