The emphasis on education in the budget has been on the rise in the last one or two years and Budget 2011 has been no different. The budget has many positive announcements, with the finance minister acknowledging that India’s demographic profile is both an opportunity and a challenge, with more than 70% Indians expected to be in the working population by 2025.
The budget proposes a fund outflow of Rs 52,057 crore for education in 2011-12, a 24% increase from the current fiscal’s estimates. The double-digit increase in budgetary allocation is welcome and some part of this funding is likely to be applied towards the implementation of the Right to Education (RTE) Act.
The implementation of the RTE Act, which continues to see funding challenges along with other conceptual and implementation hurdles, would also require subsequent budgets to provide large allocations.
The budget has announced a Centrally-sponsored vocational scheme to be implemented from fiscal 2012, which will introduce vocational training as a part of secondary education. The budget has also proposed the introduction of a scholarship scheme for class IX and X students from scheduled caste and scheduled tribe communities. Both proposals are well thought through; they can reduce the number of dropouts from schools and bridge supply gaps to skill-driven industries.
While the budget seems to have touched upon the scope of taxation of education services for service tax purposes, recognized courses continue to be outside the purview of taxation. Under the law as it stands today, an institute imparting recognized courses was granted a blanket exemption from service tax even if it was engaged in rendering other courses, such as vocational courses, which may not require separate recognition.
This resulted in an anomaly, since unrecognized courses that were otherwise subject to service tax escaped the service tax levy on account of being conducted by entities having recognized courses as part of their service offerings. As per the proposed amendment, all unrecognized courses, whether imparted by recognized or unrecognized institutions, would be subject to the service tax.
The budget proposes to introduce a comprehensive policy that can be used by the Centre and the state governments in further developing public-private partnerships. One would hope that this policy captures education-related infrastructure as well. Overall, the budget has been positive for the sector. While it is silent on the passage of pending higher education Bills, the fine print does find allocations for the creation of the National Commission for Higher Education and Research, education tribunals, and the Accreditation Authority. These do seem to suggest that the government is serious on the enactment of such Bills. Their passage would positively impact reform.