India’s Education Budget: Trends and Challenges

Source: Indian Express
GS II: Issues relating to Education, GS III: Inclusive Growth

Overview

1. News in Brief
2. Key Issues Highlights
3. Key impacts on human capital development
4. Significance of Higher Education Spending

Why in the News?

An analysis of Union Budget allocations shows that the Education Ministry’s share of the total Union Budget has declined over the past 12 years, despite an increase in absolute expenditure.

News in Brief

• Road transport and highways witnessed a significant increase in budget share, while education’s relative allocation declined.
• Education expenditure has increased in rupee terms but declined as a share of the total Union Budget.
• The Ministry of Education’s budget share fell from about 4.6% in 2013–14 to 2.5% in 2025–26.
• School education and higher education have both experienced a decline in their relative budget shares.
• The Skill Development Ministry’s share remained extremely low, falling from around 0.06% to 0.05%.
• NEP 2020 calls for public investment in education to reach 6% of GDP.
• India must examine both the amount spent and the quality of educational expenditure.
• More funding is required for foundational learning, teachers, digital access, research, skills and disadvantaged students.

How Should an Education Budget Be Evaluated?

• An education budget should not be judged only by the total amount announced.
• A proper evaluation requires at least five indicators.

Absolute allocation

• This is the total amount of money allocated to education in rupees.
• Absolute allocations normally rise over time because of inflation, salary increases and the expansion of government programmes.

Share of the total Budget

• This shows how much importance education receives compared with other government priorities.
• If the education allocation rises by 5% but the total Budget rises by 10%, education’s relative share declines.

Education expenditure as a percentage of GDP

• This compares public education spending with the overall size of the economy.
• It helps assess whether education investment is keeping pace with economic growth.

Actual expenditure

• Budget Estimates are the amounts initially proposed. Revised Estimates and Actual Expenditure show how much was later approved and actually spent.
• A large allocation has limited value when funds remain unspent or are released late.

Quality of expenditure

The effectiveness of spending is equally important.

Education funding should lead to:

• Better learning outcomes
• Adequate teachers
• Improved school infrastructure
• Reduced dropout rates
• Greater access for disadvantaged groups
• Better research
• Higher employability

Therefore, India needs both adequate funding and efficient utilisation.

Key Issues Highlights

• Declining Share of Education in the Union Budget
  • The overall share allocated to the Education Ministry fell from 4.6% to 2.5%.
  • The allocation for the Department of School Education is now less than half of what it was 12 years ago.
  • The share for the Department of Higher Education has reduced to just 60% of its former budgetary share.
• Changing Budget Priorities
  • The Road Transport and Highways sector’s budget share has nearly tripled, reaching 5.8% of the Union Budget.
  • Despite emphasis on Skill India, the Skill Development Ministry continues to receive a very small allocation, declining slightly from 0.06% to 0.05%.
• Gap in Public Spending on Education
  • National Education Policy 2020 and the historical Kothari Commission recommend a combined Centre-State education spend of 6% of GDP.
  • India’s overall public spending on education (including state budgets) currently hovers around 4.1% of GDP, which falls consistently below the recommended global benchmarks.
• Low allocation for skill development 
  • The Ministry of Skill Development and Entrepreneurship was established in 2014 to coordinate national skill development programmes.
  • However, its share in the Union Budget declined from around 0.06% to approximately 0.05%.
  • This appears inconsistent with the growing need for reskilling in areas such as:

• • • Artificial intelligence
    • Robotics
    • Renewable energy
    • Advanced manufacturing
    • Electronics
    • Data analytics
    • Healthcare
    • Construction
    • Logistics
  • The funding gap is particularly relevant because India faces the problem of educated unemployment alongside shortages of industry-ready skills.
• Rising priority for physical infrastructure
  • The Ministry of Road Transport and Highways increased its share of the Union Budget to around 5.8%.
  • In 2013–14, education and health together received about 6.5% of the Budget, compared with around 1.8% for roads and highways.
  • By 2025–26, education and health together accounted for approximately 4.5%, while roads and highways alone received about 5.8%.

Key impacts on human capital development

• Inadequate Foundational Learning
  • Lower relative spending restricts the ability to implement the structural overhauls outlined in the National Education Policy 2020.
  • This shortfall limits advancements in early childhood education and Foundational Literacy and Numeracy (FLN).
• Persistent Skill Mismatches
  • With skill development funding remaining disproportionately low, the education-to-employment pipeline suffers.
  • This contributes to higher rates of educated but jobless youth and leaves the workforce inadequately prepared for a technology-driven economy.
• Lower Quality in Higher Education
  • Shrinking shares of central expenditure hinder institutional capacity, leading to faculty shortages and limited resources for Research and Development.
• Widening Inequality
  • Insufficient public education funding leads to a reliance on expensive private education.
  • This limits upward mobility and widens the digital and educational divide for marginalized communities and lagging states.

Significance of Higher Education Spending

• Improves human capital and productivity.
• Enhances employability and skilled workforce.
• Promotes innovation and research.
• Reduces inequality through better educational access.
• Supports India’s demographic dividend and economic growth.

Major Areas Requiring Education Funding

Early childhood care and education

The first years of a child’s life are crucial for cognitive, emotional and physical development.

NEP 2020 brought children aged three to six within the formal educational vision through the 5+3+3+4 structure.

Investment is required to:

• • Strengthen Anganwadi centres
  • Train early childhood educators
  • Provide age-appropriate learning material
  • Improve nutrition
  • Coordinate health and education services

Weak early childhood development affects learning throughout a student’s life.

Foundational literacy and numeracy

A child who cannot read with understanding or perform basic arithmetic at the primary level will struggle in later classes.

Funding is required for:

• • Teaching-learning material
  • Teacher support
  • Local-language resources
  • Student assessment
  • Remedial education
  • Community participation

Foundational Literacy and Numeracy under the NIPUN Bharat Mission should therefore receive sustained support.

Teacher recruitment and development

Teachers are the most important resource in the education system.

Budgetary support is required for:

• • Filling vacancies
  • Reducing the use of temporary teachers
  • Continuous professional training
  • Digital teaching skills
  • Special educators
  • Reasonable pupil–teacher ratios
  • Improved teacher support systems

Merely constructing classrooms without appointing trained teachers will not improve education quality.

School infrastructure

• India has improved access to electricity, drinking water and toilets in schools.
• However, gaps remain in internet access, computers and facilities for children with special needs.
• UDISE+ 2024–25 reported that around 64.7% of schools had computer facilities and about 63.5% had internet access.
• Only about 35.6% had toilets friendly to Children with Special Needs, while approximately 54.9% had ramps with handrails.
• Future expenditure must therefore focus on the usability and quality of infrastructure, not merely its formal availability.

Secondary education

Enrolment and retention tend to decline as students move to higher classes.

UDISE+ 2024–25 recorded a secondary-level dropout rate of around 11.5%. The retention rate from Class 1 to Class 12 was approximately 47.2%.

Important reasons include:

• • Poverty
  • Child labour
  • Early marriage
  • Distance from schools
  • Lack of transport
  • Examination failure
  • Household responsibilities
  • Limited availability of higher-secondary schools

Scholarships, transport, hostels and counselling can improve retention.

Higher education

Higher education is essential for producing:

• • Doctors
  • Engineers
  • Teachers
  • Scientists
  • Civil servants
  • Researchers
  • Entrepreneurs
  • Skilled professionals

Funding is required to improve:

• • Faculty strength
  • Laboratories
  • Libraries
  • Student accommodation
  • Scholarships
  • Research
  • Digital infrastructure
  • Institutional autonomy
  • State universities and colleges

A major challenge is the difference in quality between a small number of leading institutions and a large number of under-resourced colleges.

Research and innovation

Universities should not function only as teaching institutions.

They must also generate new knowledge, patents, technology and solutions to national problems.

Greater support is required for research in:

• • Artificial intelligence
  • Semiconductors
  • Biotechnology
  • Climate science
  • Agriculture
  • Public health
  • Defence technology
  • Clean energy
  • Social sciences
  • Indian languages

Research funding must be transparent, competitive and available beyond a few elite institutions.

Vocational education and skills

India’s education system has traditionally separated academic education from vocational training.

NEP 2020 seeks greater integration of vocational education with schools and higher education.

Budgetary support is needed for:

• • Modern training equipment
  • Apprenticeships
  • Industry partnerships
  • Instructor development
  • Recognition of prior learning
  • Career guidance
  • Reskilling and upskilling
  • District-level skill mapping

Skills programmes should be connected to actual local and national employment demand.

Digital education

Digital platforms can expand access, but they can also deepen inequality.

Students require:

• • Reliable internet
  • Affordable devices
  • Electricity
  • Accessible digital content
  • Local-language learning material
  • Teacher guidance
  • Protection of personal data

Digital education should supplement teachers and classrooms rather than replace them.

Important Government Initiatives

Samagra Shiksha

• An integrated school education scheme covering pre-primary to senior-secondary education.
• It supports access, inclusion, infrastructure, teacher education and learning outcomes.

NIPUN Bharat

• The mission aims to ensure foundational literacy and numeracy among children at the primary stage.

PM POSHAN

• The programme provides cooked meals to eligible schoolchildren.
• Spports nutrition, attendance and social inclusion.

PM SHRI Schools

• The programme seeks to develop more than 14,500 schools as model institutions demonstrating the implementation of NEP 2020.

DIKSHA

• A national digital platform providing educational resources for teachers and students.

PM-USHA

• Pradhan Mantri Uchchatar Shiksha Abhiyan supports state higher educational institutions.
• Seeks to improve access, equity and quality.

Skill India Mission

• It seeks to improve employability through vocational education, short-term training, apprenticeships and recognition of prior learning.
• The success of these programmes depends on adequate and timely financial support.

Way Forward & Conclusion

Increase public investment in education, strengthen school and higher education infrastructure, improve learning outcomes, expand skill development, and enhance research funding.

Sustained investment in education is essential for inclusive growth, innovation, and achieving the vision of Viksit Bharat 2047.

Key Takeaways

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UPSC Prelims and Mains Practice Question

Consider the following statements regarding education expenditure in India:

1. The share of the Ministry of Education in the Union Budget has declined over the last decade.
2. The National Education Policy (NEP), 2020 recommends increasing public expenditure on education to 6% of GDP.
3. Education is included in the State List of the Constitution.

Which of the statements given above is/are correct?

(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 only
(d) 1, 2 and 3

Answer: (a)

Mains Practice Question

Q. Human capital is a key driver of economic growth. Evaluate how budgetary allocations to education influence India’s demographic dividend and economic competitiveness. (250 Words)

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