Budgeting for education

Written by Dhiraj Mathur | Updated: Jul 21 2014, 18:51pm hrs
Education, particularly school education, is a key driver for productivity and is essential for improving the quality of life of the people of a nation. While the expenditure on education has been increasing every year and stood at 3.3% of the GDP in 2013-14as pointed out in the Economic Surveythere is a need not only to increase the amount but also to address issues of quality, access and equity.

By way of illustration, while the per child expenditure by central and state governments has doubled to R11,418 in 2011-12 from R5,202 in 2007-08, the Economic Survey points out two alarming statistics. First, a growing fraction of households have chosen to shift to private instead of the free public schools (in which the government spends an average of R100 per student per month). Second, the learning outcomes in government schools have declined to 32.4% compared to 59% in private schools (learning outcomes have been measured by the percentage of children in Class III that is able to read a Class I text). As the survey points out, there is clearly a need to review the design of government programmes in elementary education and the need to bring in feedback loops so that failure in outcomes can feedback adequately into resourcing and changes in management and even fundamental redesign of education programmes. We need to analyse the Budget in the context of addressing the fundamental issues confronting the sector across elementary, secondary, and higher and vocational education.

At the outset, it is important to recognise that the new government has been in office for just under two months and was not really expected to announce any new schemes. What was expected was a statement of intent and directional guidance on priorities. From this perspective, there are a number of positives for the education and training sectors.

First, there is a focus on skill development and virtual learning and a statement that elementary education is a major priority of the government. This is a public good and, therefore, a primary responsibility of the government.

Second, the launch of a teacher training programme with an initial sum of R500 crore allocation is important for addressing the issue of teacher training and quality. The setting up of a new School Assessment Programme is also an important measure in this regard.

Third, there is a focus on the education of the girl child. The finance minister has announced a new Beti Bachao, Beti Padhao Yojana (not part of the education Budget but an important supporting programme) and has made provisions for providing drinking water and toilets in all girl schools.

Fourth, IT can provide vital support in delivering standardised quality education and hence the new programme that leverages IT in setting up virtual classroomsCommunication Linked Interface for Cultivating Knowledge (CLICK)would improve the quality of education that is being imparted in schools. An important aspect of the Budget is the synergies being created across departments to achieve national goals. Though not under the education head, the finance minister proposed to launch a pan-India Digital India programme to provide broadband connectivity at the village level, as well as the National Rural Internet and Technology Mission for services in villages and schools with a provision of R500 crore are important measures for improving access and quality as well as equity.

Fifth, the government has continued with its policy of participating and providing higher education. Unlike Sarva Shiksha Abhiyan and Rashtriya Madhyamik Shiksha Abhiyan for which the allocations are essentially flat, there is a significant increase in the allocation of Rashtriya Uchchatar Shiksha Abhiyan to R2,200 crore from R400 crore provided for in the Interim Budget. Further, the setting up of five new IITs and IIMs is welcome as is the decision to set up the Jai Prakash Narayan National Centre for Excellence in Humanities (in Madhya Pradesh) with a provision of R500 crore. Similarly, the proposal to ease and simplify norms for education loans for higher studies is also an important step for improving access and equity. But there has been no supporting tax exemption.

Sixth, the purpose of education is to produce trained and educated workers who can productively participate in building the national economy. In line with the priorities of the Prime Minister, skilling the youth has been given the due importance in merits. Though not under the education head, there are three important initiatives that are good examples of creating synergies. The first is the proposal to launch a national multi-skill programme called Skill India that would focus on employability and on building entrepreneurial skill. However, the challenge would be to achieve convergence of the plethora of programmes being run by multiple departments/ministries. Second, this programme has been supplemented by the proposal to promote entrepreneurship and start-up companies by establishing a R10,000 crore fund for providing venture capital in the MSME sector. The proposal to amend the Apprenticeship Act to make it more responsive to industry and youth is the third important component of this initiative.

Budget FY15 has indicated areas of priority and has also tried to create synergies through complimentary schemes across departments. But there is no mention of involving private sector participation in higher education. In fact, the tax proposals work against private provision of educational services. Service tax exemption on rental income from immovable property from educational institutions has been withdrawn. This is a departure from the recommendation made in the Economic Survey that government spending must focus on providing public goodshigher education does not fall under the category.

The author is Leader, Education, PwC India