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Skill Ministry allocation jumps nearly fourfold in Budget 2026; upgrading ITIs under PM SETU a major focus

The 2026-27 Union Budget significantly increases skill development funding to Rs 9,885.80 crore, focusing on human capital, job readiness, and aligning education with industry needs.

3 min readNew DelhiUpdated: Feb 3, 2026 09:22 AM IST

Skill Ministry Budget Allocation Increased Manifold in 2026 (AI generated image)

Education Buget 2026: The Union Budget 2026–27, presented by the Finance Minister on Sunday, has sharply scaled up spending on skill development, with the Ministry of Skill Development and Entrepreneurship receiving an allocation of Rs 9,885.80 crore. In her Budget speech, Union Finance Minister signalled a renewed push to link skilling with jobs, services-led growth, and India’s long-term demographic dividend.

The allocation marks a steep jump from Rs 2,703.54 crore in the Revised Estimates (RE) for 2025–26, and is significantly higher than the Rs 6,100 crore provided in last year’s Budget Estimates (BE). The sharp upward revision comes after a year in which spending was curtailed, reflecting the government’s recalibration towards employment-oriented expenditure in Budget 2026.

Skill Ministry Budget allocation shows sharp rise from 2025–26 RE to 2026–27 BE

The 2026–27 Budget places strong emphasis on human capital, employability, and services-sector readiness, alongside continued capital expenditure. Skilling has been positioned as a critical enabler for sectors such as healthcare, manufacturing, textiles, tourism, logistics, AVGC, and the care economy.

Also Read| Budget 2026: What’s in store for education?

A large share of the Skill Ministry’s allocation has been routed through centrally sponsored schemes, underlining the Centre’s intent to drive skilling outcomes on the ground through states and industry-linked institutions.

The flagship Pradhan Mantri Skilling and Employability Transformation through Upgraded ITIs (PM SETU) scheme alone has been allocated Rs 6,140.50 crore, accounting for over 60 per cent of the ministry’s total outlay.

Share of PM SETU in Skill Ministry Budget 2026–27 highlights dominance of ITI upgradation in overall skilling outlay

PM SETU focuses on modernising Industrial Training Institutes (ITIs), aligning courses with industry demand, upgrading infrastructure, and improving placement outcomes — a key concern repeatedly flagged in policy discussions and Budget commentaries this year.

Welcoming the allocation, Minister for Skill Development and Entrepreneurship Jayant Chaudhary described the Budget as “Yuva Shakti-driven” and aligned with the vision of Viksit Bharat 2047.

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“A defining feature of this Budget is its decisive commitment to skill development and human capital. The Ministry has received a 62 per cent increase in allocation, affirming the government’s resolve to place skills at the centre of economic transformation,” he said.

Beyond ITIs, the Budget also expands support for NSQF-aligned programmes, caregiver and allied health training, textile and handicraft skilling, and sports- and services-linked skill ecosystems. According to The Indian Express’s reading of the Budget, this reflects a shift from short-term training targets to sector-specific, employment-linked skilling pipelines, particularly for Tier-II and Tier-III cities.

The renewed thrust on services — including healthcare, medical value tourism, IT, hospitality, and design — dovetails with Budget 2026’s broader strategy of crowding in private investment through sustained public spending, while preparing India’s workforce for labour-intensive and export-facing sectors.

(With PTI inputs)