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Increased budgetary outlays for education, as well as enabling reforms, key for India to reclaim its historical place

Jul 22, 2024 12:59 PM IST

Investment in education is the lowest common denominator for solving the majority of India’s long-term challenges.

The emergence and rapid adoption of disruptive technologies like AI and quantum computing mean that students currently in school and college will experience a work and life environment very different from what they are used to. The 2024 budget, with its potential to significantly influence the allocation of resources to the education sector, will play a crucial role in how the Indian economy handles this transition.

Union Finance Minister Nirmala Sitharaman at Parliament, during the ongoing Budget Session, in New Delhi. (PTI)
Union Finance Minister Nirmala Sitharaman at Parliament, during the ongoing Budget Session, in New Delhi. (PTI)

Since education is a part of the concurrent list in the Indian constitution, both the Centre and states have rights and responsibilities to allocate budgets and frame educational policies. The total budgeted expenditure on education as a % of the GDP is about 3.5%; however, the centre bears only one-fourth of the total government spending on education, whereas the remaining three-fourths comes from the State Governments.

Investment in education is the lowest common denominator for solving the majority of India’s long-term challenges. For India to reap the benefits of the demographic dividend of a young population, the central government must increase its spending on education.

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The importance of increasing the expenditure on education to a minimum of 6% of the GDP was highlighted first by the Kothari Commission in 1966. The 6% target was also reiterated in the NEP 2020. We are currently well below that target. This spending increase is required to keep abreast of the AI and technology race and meet the basic needs of primary and secondary education.

The increase in spending to meet the 6% target and exceed that is important because even though the overall expenditure on education is more than 1 lakh crores, the share of Plan spending is only about 35 per cent. The remaining 65 percent comprises of Non-Plan expenditure that takes care of recurring expenses related to maintenance and upkeep, salaries of regular staff and expenditure towards operation and maintenance of assets created through development schemes.

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The increased outlay in education must be equitably distributed between the primary, secondary and higher education tiers. Primary education is a resource for secondary education, which acts as a resource for higher education. Thus, all three sectors create the country's final demand for and output of education Increased government spending on R&D and incentivizing the private sector to increase the spending on R&D will be crucial to ensure the competitiveness of the Indian economy.

India’s current spend on R&D is 0.65 % of the GDP; this is lower than our peers in the BRICS and well below the global average of 1.5%. We are at the cusp of an epoch change where disruptive technologies like AI, quantum computing, CRISPR and similar radical disruptors will change society and economies as profoundly as the transition from an Agricultural Society to the Industrial Revolution of the 18th century. The tech revolutions will upend the traditional geo-political divide of the Global South and Global North blocks.

India can ensure it doesn’t end up with the have-nots and rapidly modernising the education system. We need to step up our expenditure on research to pursue large-scale innovation. The private sector, which contributes one-fourth of our country’s expenditure on research and development, should be incentivized by tax breaks and other such steps to increase their share of spending to levels prevalent in nations such as Japan, US and South Korea.

The most important vector of change for modernising the education system will be fiscal, but liberalization and deregulation will also play a very important role. The quality of the higher education sector is a very important predictor of the long-term competitiveness of a country.

India, with its 1100 + universities and 44,000 colleges, is the third largest education system in the world. Still, there is a big skill gap between the requirements of the private sector and the skills imparted by most of these higher education institutes.

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With a shortage of quality higher education institutions, India faces the challenge of educating nearly 30 per cent of its 1.3 billion people. The public expenditure on higher education in India is about 0.6% of the GDP, compared to 2.7% in the USA. Closing this gap cannot be met by the public sector alone. The 2024 budget can aid this process by setting the steps for reforms and de-regulating the higher education sector to increase private sector involvement. In 2023, the University Grants Commission (UGC) released its regulations for setting up and operating campuses of 'foreign higher educational institutions' (FHEI) in any part of India. This is one such important step.

Further reforms are needed on this front. This will enable not just greater investment in the higher education sector in India but will also allow global best practices and research to become available faster to our students.

Conclusion

Lack of access to a modern education system was the main reason that the fruits of the The Industrial Revolution and the ensuing global geo-political domination went to the current Global North. We have almost constantly been playing a game of catch-up since then. The aspiration and energy of young India is to reclaim its rightful global spot. Increased budgetary outlays for education, as well as enabling reforms, are going to be key for India to do justice to its demographic dividend and reclaim its historical place in the global geopolitical order.

(Author Praneet Mungali is Trustee and Educationist, Sanskriti Group of Schools, Pune. Views expressed here are personal.)

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