— Written By Kalpesh Banker
India is going through an economic crisis, with leading economists forecasting difficult times ahead. In this scenario, all the sectors have great expectations from the upcoming budget. In the last few months, we have seen increasing dissatisfaction among Indian youth and the government, thus, cannot ignore education sector expectations. Some special announcements on education and employment front are, therefore, expected from the budget.
In the last budget, the government allocated Rs 94,854 crore for the education sector, which was about 11.3 per cent higher than the revised allocation of Rs 83,626 crore for the financial year 2018-19. This year, the government should increase the education budget by at least 15 per cent. The education sector has been neglected for long and looking at the long term challenges India is facing, with 15 per cent increase in education budget over next two years, will increase India’s education spending to 6 per cent of GDP.
The increased budget should be utilised to improve overall education infrastructure and improve GER (Gross Enrollment Ratio) in higher education. It should also be allocated to increase the employability of Indian youth.
Open FDI in higher education
Considering the size of the Indian education system, it is evident that the government alone cannot fulfill the financial investment requirement for this sector. To meet the demand, it will have to increase private and foreign investment in education. The private sector is increasingly spending in this sector through mandatory spends in CSR. To boost investment further, the government will have to open FDI, specifically in higher education.
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Educationists are against FDI in higher education, however, this government is known for taking bold decisions. It can address concerns by allowing institutions ranked among the top 500 in the global rankings.
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Reduce GST, provide funds
To achieve the objectives of research and innovation, the Finance Minister Nirmala Sitharaman should start working on setting up of a National Research Foundation (NRF) to fund, coordinate and promote research in the country. The government should promote its “Study in India” program by providing incentives for generating revenue through foreign student enrolment.
The traditional model of classroom-based education will not be able to meet the increasing demand and technology-based online education should play an important role in broadening access to education. To improve enrollment to the online education, the government should reduce the current 18 per cent GST over online educational courses. This will help in making online education affordable and to improve access to education.
As online education plays an important role in re-skilling and up-skilling, this will make Indian skilled workforce relevant to emerging demands, especially in Artificial Intelligence and digital technologies. To read more on how skill gap affecting hiring across India, click here.
Increase public spending on education
It is also important to ease education financing norms. Currently, as per the RBI norms, agriculture, MSMEs and the housing sector, up to prescribed limits, are treated as priority sector loans from registered NBFCs. To increase the availability of education loans, NBFCs with a specific focus on education financing should be included in the priority sector for loans from NBFCs.
Unemployment and slow rate of job creation has been the biggest challenge for the government and failure in this area has been showing up in youth dissatisfaction. New job creation should be the number 1 priority of the finance minister in this budget. The most effective way to create new jobs is encouraging public spending, which generates new demand and new jobs.
To increase public spending, the government should increase the income tax exemption limit from the current 2.5 lakh. The government should also extend 10 per cent tax slab to Rs 10 lakh, which will bring significant relief to a large chunk of taxpayers and increase public spending in the economy.
The Finance Minister can directly boost public spending on education by exempting school / college fees and education loans above 80C tax-saving exemption. This move will serve the dual objective of increased public spending on education and improved investment in the economy for new job creation.
— The author is managing partner of EduShine Advisory – higher education focused management consulting and executive search firm
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