BackWhat education sector and NBFC industry are expecting from Budget 2023?
Below is a breakdown of a few major expectations provided by industry professionals to stimulate the growth of the education and NBFC sectors.
PremiumOn February 1, 2023, Union Budget 2023–24 will be tabled to parliament by Finance Minister Nirmala Sitharaman, whereas on January 31, the finance minister will address the Economic Survey of India. Below is a breakdown of a few major expectations provided by industry professionals to stimulate the growth of the education and NBFC sectors.
NBFC-focused pre-budget expectations by Mr Ankit Mehra, CEO and Co-founder of GyanDhan
Credit availability for priority sector lending: The co-lending norms were introduced by the RBI in 2018 to improve access to credit for priority sector lending. While most banks have policies on co-lending, these are suited only for relatively larger NBFCs. NBFCs catering to the priority sector areas in niche segments fall outside the ambit of the bank policies. Budgetary relaxations/support to allow smaller NBFCs to participate in co-lending programs will go a long way towards achieving the end goal of addressing the problem of lack of access to financing in priority sector areas.
Govt. support in deepening the corporate bond markets: Deepening corporate bonds will attract new sources of capital, resulting in a lower cost of borrowing.
Clarity in Digital Lending norms: The norms, effective from 1st December 2022, are expected to lay a solid foundation for digital lending and should address the malpractices that were prevalent in the fledgling sector. The government can consider streamlining the process of obtaining licenses and approvals. There should also be changes to ensure a fair playing field for both online and offline lenders.
Education-focused pre-budget expectations by Mr Ankit Mehra, CEO and Co-founder of GyanDhan
Investments in the education sector: Despite multiple reports highlighting the need for investment in the education sector, budgetary allocation to education has consistently fallen short of expectations. While fiscal management may result in disappointment in terms of allocation, the government can make other policy changes to encourage external investments in the education sector. The UGC proposal for allowing foreign universities to establish campuses in India is a welcome step. In line with the recommendations in the draft proposal, policy changes to allow greater academic and administrative independence will be another positive move. Steps taken to promote the setting up of university endowments akin to US universities can be a potential game changer for the higher education sector.
Tighter controls in the EdTech sector: With the increased scrutiny of the predatory practices rampant in the EdTech sector, it is expected some regulations will be implemented in this sector.
Tax SOPs: Section 80E coverage to include various lending institutions: Sec 80E of the Income Tax Act allows for tax deductions for the interest paid on education loans. However, loans availed from banks and one NBFC qualify for this deduction. Expanding the scope to cover all NBFCs will allow for a level playing field while reducing the total cost to the end consumer.
Currently, only home loan repayments qualify for the Sec80C exemption criteria. The inclusion of repayment of education loans in the Sec80C deduction will significantly boost the education loan market.
Why government should emphasise the positive impact of digital education?
Divya Jain, Director, The Class of One said “The government advanced the wave of digital education with the announcements of the opening of the digital university and expanding the ambit of the PM e-vidya programme to compensate for the learning losses of students in the previous Budget. The Budget should bring more reforms to expedite the digital learning revolution, which will help create a parallel education mechanism and give many students quality-based learning. The education sector is growing on a massive scale, and funds should be allocated commensurate with its market size and growth dynamics. On the other side, there are many people who subscribe to the ideology that a degree acquired from a virtual school is worthless. The government should emphasise the positive impact of digital education. The Budget should incentive the digital education sector and introduce measures so that the general public can outgrow this misperception."
What measures should be taken by the govt to increase pupils' learning possibilities?
Tanvi Miglani, Spokesperson, HLM Group of Institutions said “The government should allocate more money in practical learning programs where students get a platform where they can earn while learning because this aspect does not only require investment and support from the government but also from private industries. To satisfy the sector's expanding demands and shifting realities, the funding should be further boosted after increasing by a sizeable percentage the previous year. Long-term welfare policies like skill-centric learning should be enacted to increase pupils' learning possibilities. Also, a major focus should be made on shifting learning pedagogy from theory to practice where students can experience real-life projects for the duration of courses which helps them to become independent. Government should emphasise special schemes or reserve funds for girls’ education. Research and innovation programs must also be promoted at school and UG levels for a better outcome. After Covid, the government should adopt a caring approach and create policies that support pro-mental health policy positions for students. Scholarship benefits should be consistently increased without reduction. Simultaneously, keeping in view the government’s initiative of inviting foreign universities to the country, they must also focus on improving the state of the private universities in India."
Anshu Mital, Principal, MRG School, Rohini said “The Budget should echo the demands of the education sector. One of the pressing demands has been to allocate 6% of India’s GDP towards improving students’ lives and bettering the current academic apparatus. The education sector is the bedrock of the country’s economic and socio-cultural identity. Proactive policies should be formulated to augment skill-based and practical learning toolkits and make students receptive and intelligent learners. Last year, the funds allocated towards the education sector saw a substantial upsurge, and it should further be increased this year. Upskilling programmes for youth should be ratified to open up a vast array of employment opportunities for them. There is also a need to strategise policies to activate mental health professionals and psychologists to help distressed students and normalise mental health issues and create an open-ended dialogue space for them."
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