What has also taken many by surprise is the cut in spending on education by at least Rs 6,000 crore.
The union budget
2021 has allocated Rs 93,224.31 crore to the two departments of education ministry, down by over Rs 6,000 crore from the 2020-21 budget estimates (BE). Till last year, generally there has been a five per cent increase in education outlay, which largely covered inflation.
But compared to BE 2020-21 of Rs 99,311 crore, BE 2021-22 of Rs 93,224 crore has now seen around six per cent decline in outlays for education sector, with both school and higher education losing out. For instance, outlay for higher education declined from Rs 39,466 crore to Rs 38,350 crore while that for school education declined from Rs 59,845 crore to Rs 54,873 crore.
"We are all aware that FY 2020-21 is the most unusual year when education like many other sectors suffered due to pandemic and hence one can expect a low utilisation of budgetary outlays for the year as in reflected in the RE 2020-21 of Rs 85,089 crore. However, given the financial constrained witnessed by the sector, the government should have considered an increased budget allocation," says Vidya Yeravdekar, Chairperson of the Federation of Indian Chambers of Commerce & Industry (Ficci)'s Higher Education Committee and Pro-Chancellor of Symbiosis International University.
Announcements like setting up of a National Digital Educational Architecture (NDEAR) and the Rs 3000 crore allocation and amendment of the Apprenticeship Act to further enhancing apprenticeship opportunities have been welcomed. However, given a challenging year amid the COVID-19 pandemic, spending should have been increased for the education sector.
"Reducing education outlay at this time is perhaps not right. This is also the year when the government has just brought the new NEP. Given the financial requirement for the new policy implementation, it does not make sense to reduce the education budget. Many were expecting that there will be more allocation for NEP itself for enabling implementation. There is not enough funding and backing for NEP in the current budget. Even otherwise, it doesn't make sense to reduce education outlay, be it school or higher education, when roughly 50 per cent of India's population is in that age bracket," says Narayanan Ramaswamy, Partner & Leader for Education & Skill Development Sector, KPMG India.
Apparently, the NEP document also talks about a minimum requirement of year-on-year (YoY) spending of six per cent of the gross domestic product (GDP) in education for a proper implementation of the policy. However, currently, the spending hardly touches even three per cent of GDP.
"This means that a large part of the education system will go on the way it has been going and that there hasn't been any additional incentives or allocations for states also to take up the NEP implementation. Education being a concurrent subject, states can have their programs and it will be upon states to put something in their budgets for NEP. But we don't see any new incentivisation for states for NEP implementation. While these expectations were there, given the pandemic situation, increasing spending on healthcare and reviving the economy was the priority," adds Mallick.
On its part, Ficci too has been recommending an increase in public spend on education from the current three per cent of GDP to six per cent of GDP with higher education spend to be raised from one per cent to 1.5 per cent of GDP and that of school education from the current two per cent to 4.5 per cent.
To augment the much needed investment in the sector, FICCI has also been suggesting to allow institutions in India to invest their surpluses / endowment funds in wider asset classes such as equity, alternative investment funds, investment trusts in addition to the currently permissible instruments such as debt, debt related instruments, as well as looking at ways to bring the rate of interest on student loans to nominal four per cent from current 10-14 per cent.
Meanwhile, India's budget cut on education also deviates from country's reaching United Nations Development Program (UNDP)'s sustainable development goal (SDG) 4. According to Yeravdekar, the UNDP estimates financial requirement for reaching sustainable development goal (SDG) 4, which refers to quality education, by 2030 to be around $2,258 billion, which averages USD 173 billion per annum from 2017 – 2030, far exceeding the current government budget of $51.5 billion a year.