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New Delhi: India on Friday proposed an almost 18% increase in the education budget to 61,407 crore for the fiscal starting on 1 April amid increasing concerns that the country risks losing its competitive edge because of a perceived drop in the quality of education.

The amount proposed in finance minister Pranab Mukherjee’s budget speech in Parliament compares with an allocation of 52,060 crore for education in the current fiscal year.

In the previous budget, the government had allocated some 38,957 crore for the segment. Higher education received an outlay of 15,438 crore, up from 13,103 crore.

The latest budget follows increasing concerns over the quality of India’s education system. Three recent reports have highlighted drawbacks in the education system, sparking worries that India’s long-term competitiveness is at risk of being eroded,

The 2011 Annual Status of Education Report, compiled by Pratham, an educational non-profit organization, had found that less than one in two class V students are able to read class II level texts.

The Quality Education Survey by Wipro Ltd and Educational Initiatives, an education assessment firm, found that high-end schools in metros lacked quality parameters and largely depended on rote learning.

A study by the Programme for International Student Assessment found that out of 74 countries, Indian school students at the higher secondary level ranked almost at the bottom, with only Kyrgyzstan faring worse than India.

“The increase in budgetary allocations for school education...is a very welcome step," said Shiv Nadar, chairman of HCL Technologies Ltd and Shiv Nadar Foundation, a non-profit that’s active in education.

Yet, spending more money on education doesn’t necessarily translate into better outcomes, said some critics.

“More allocation does not guarantee better quality in education as the government’s policies are confusing and implementation record is poor," said Pramod Maheshwari, chief executive officer of CareerPoint Ltd, an education company.

The budget has done little to boost private investment in education, he complained. It has hiked the service tax from 10% to 12% for supplementary education providers like tutorial and training schools, potentially making such services more expensive for students, Maheshwari said.

In the next fiscal, of the total school education outlay, the government proposes to spend some 25,555 crore for implementation of the Right to Education (RTE) Act that promises compulsory education to all children in the 6-14 age group.

However, it may not be sufficient because the requirement is some 10,000 crore more than the proposed allocation. According to the ministry of human resource development estimate, the central government needs to spend some 35,000 crore annually for smooth implementation of RTE.

Another key allocation is 11,937 crore for mid-day meals, a scheme that aims to attract students to elementary schools by providing them food.

Mukherjee set aside 3,124 crore for the Rashtriya Madhyamik Shiksha Abhiyan, a scheme for promoting secondary education. Under this programme, the government plans to open some 6,000 model schools, including 2,500 in collaboration with the private sector, during the 12th Five-Year Plan (2012-17) beginning in April.

“The model school proposal seems exciting as it gives a policy direction on private participation," said Sanjiv Mansotra, chairman of education technology firm Core Education Ltd. “We look forward to the PPP (public-private partnership) schools."

Mukherjee, in his speech, said the government wants to open two credit-guarantee funds—one facilitating hassle-free loans for poor students wanting to pursue higher education, and another for equipping students with job skills.

The budget proposed an outlay of 1,000 crore for the National Skill Development Fund to bridge the so-called education-employability mismatch amid complaints by many employers that students graduating from colleges were not job-ready.

Of the total outlay in the higher education sector, the budget set aside 800 crore for providing an interest subsidy to students who take study loans provided their annual family income is less than 4.5 lakh.

Shares of listed education companies fell on Friday as investors who had been expecting policy guidelines for turning education into a for-profit sector from a not-for-profit activity were disappointed.

Career Point stock ended the day’s trading at 190, down 7.6% on the National Stock Exchange.

Shares of Educomp Solutions Ltd, Zee Learn Ltd, Edserv Softsystems Ltd, Everonn Education Ltd and Tree House Education dropped between 3.74% and 6%. The benchmark Sensex lost 1.07% to end at 17,486.62 points on Friday.

prashant.m@livemint.com

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