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Business News/ Budget 2015 / Budget News/  Budget 2015: Focus shifts to higher education

Budget 2015: Focus shifts to higher education

Union budget proposes to set aside Rs69,075 crore for education sector in 2015-16

The school sector will see a cut of nearly 25% in its planned outlay, from Rs51,828 crore in the last budget to Rs39,038.5 crore this year. Photo: Indranil Bhoumik/Mint (Indranil Bhoumik/Mint)Premium
The school sector will see a cut of nearly 25% in its planned outlay, from Rs51,828 crore in the last budget to Rs39,038.5 crore this year. Photo: Indranil Bhoumik/Mint
(Indranil Bhoumik/Mint)

New Delhi: Finance minister Arun Jaitley on Saturday marginally reduced overall allocations towards education but increased the planned higher education budget by nearly 22%, indicating a shift in focus from school to higher education in the national budget presented in Parliament.

Jaitley proposed to set aside 69,074.76 crore for education in 2015-16, as against 70,505 crore in the revised estimate in 2014-15. The revised budget for 2014-15 has reduced the education allocation to 70,505 crore from 82,777 crore as was pegged in the budget estimate.

Of the total outlay for 2015-16, 42,219.5 crore was pegged for the schools sector and 26,855.26 crore for higher education.

Allocations to the school sector was cut by around 10% in its planned outlay from 43,517.9 crore in the last budget to 39,038.5 crore in the year that begins on 1 April.

In comparison, higher education has been given a plan allocation of 15,8555.26 crore in 2015-16, as against 13,000 crore pegged in the revised budget for 2014-15. In other words, the higher education sector saw an increase of nearly 22%.

“It seems the central government wants to focus more on higher education and try to target 30 million near-productive population in higher educational institutes," said Narayanan Ramaswamy, partner and head education practice at consulting firm KPMG. “These people, unless attended to well, may shift their base out of India and impact the economy."

There is a growing focus on higher education after the new government swept to power in May last year, according to Pramath Sinha, an educationist and founding dean of Indian School of Business in Hyderabad and dean of Ashoka University, since all the big-ticket announcements are largely in this space. “The announcement of new top schools like IIMs and IITs indicate that they are looking at higher education in a big way."

Keeping the government’s focus on higher education, the finance minister announced more institutes of excellence— including two Indian Institutes of Management (IIMs) and two Indian Institutes of Technology (IITs).

While one IIT will come up in Karnataka, the second one will be created by upgrading the Indian School of Mines (ISM), Dhanbad to an IIT. ISM has been admitting students along with the IITs through the prestigious joint entrance exam system.

The school has been demanding an IIT status more so after Institute of Technology at Benaras Hindu University (BHU) was upgraded to an IIT a few years back.

“ISM upgradation will have two benefits— Jharkhand will get an IIT, and second instead of developing an IIT from scratch, this upgradation will need less resources both in terms of finance and human capital," said a human resource development ministry official, who declined to be named.

The two proposed IIMs will come up in Jammu and Kashmir and Andhra Pradesh. The announcement for an IIM in Andhra Pradesh is not new as the government had promised to provide it an IIM, after the division of the state. The state government has already finalized land for its establishment.

In the last budget, Jaitley had announced five new IIMs and five new IITs. Last July, Jaitley had proposed to set up IITs in Jammu and Kashmir, Chhattisgarh, Goa, Andhra Pradesh and Kerala, and IIMs in Himachal Pradesh, Punjab, Bihar, Odisha and Maharashtra.

Once all of them are operational, India will have 20 IIMs and 23 IITs. On specific allocations, IITs have been allocated a planned outlay of 1,835 crore, less than the 2,320 crore outlay in the previous budget estimate.

Separately, the government has allocated 1,000 crore more to set up new IITs and new IIMs. Some of them will start operations this year.

Keeping its promise to help Andhra Pradesh get quality higher education institutes, the budget has pegged an outlay of 205 crore for the state—of which an IIT, an IIM, an NIT (National Institute of Technology), and a IISER (Indian Institute of Science Education and Research) will be allocated 40 crore each. An IIIT in the state will get 45 crore.

Besides, the finance minister said he intends to address education sector concerns and bring about better education loan facilities for higher education.

Jaitley said his government will ensure that no student misses out on higher education due to lack of funds.

“The setting up of additional central education institutes such IITs, AIIMS, IIMs combined with financial aid under the Pradhan Mantri Vidya Lakshmi Karyakram will not only benefit the young population of the country, which wants better education, but will also benefit India Inc. as the quality of our work force will improve significantly with such measures," said Ravi Mahajan, a partner with consulting firm EY India.

Ramaswamy of KPMG said the central government may be thinking of asking states to focus on elementary education as this section of the school system has achieved near universal enrolment and does not have accessibility problems.

The budget also outlined government plans to establish a senior secondary school within 5km reach of every child.

“The government has to focus on quality enhancement. Return on investment is key for any sector and they may be thinking in that line. Question is after years of heavy allocation for school sector, the quality has not improved and this aspect needs attention," Ramaswamy said.

On Friday, the Economic Survey too had highlighted the issue of quality in elementary schools and need for improvements.

Ramaswamy, however, said that this budget missed the opportunity to promote private investment in higher education. “Government, according to me, should have focused more on school sector and allowed more private play in higher education. In that count, its a missed opportunity," he said.

In the school education sector, the government has allocated 27,575 crore, same as last year, to the Prarambhik Shiksha Kosh that funds several schemes including Sarva Shiksha Abhiyan and mid-day meal scheme.

The mid-day meal scheme suffered a drastic fund cut from 1,296.5 crore last year to 132 crore this year.

Experts said this could be because the states may be asked to spend a greater portion from their own corpus that they will receive due to tax devolution as envisaged in the 14th finance commission report.

In another development, as part of the movement towards goods and services tax, Jaitley proposed to subsume the education cess and the secondary and higher education cess in central excise duty. In effect, the general rate of central excise duty of 12.36% including the cesses is being rounded off to 12.5%.

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Published: 28 Feb 2015, 06:01 PM IST
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