When Finance Minister Nirmala Sitharaman rises to present the Union Budget for 2026-27, the education sector will be watching for more than just a headline bump in allocations. Industry bodies and education leaders say the next phase of India’s growth will depend less on highways and factories, and more on whether the country can build a steady pipeline of industry-ready talent.
That framing is driving a wide-ranging wishlist, from higher public spending and regulatory loosening to artificial intelligence-led learning, vocational training and easier access to global universities.
A push to hit the 6% of GDP mark
At the centre of the sector’s fiscal ask is a renewed push to meet the National Education Policy (NEP) 2020 target of allocating 6% of GDP to education. In its pre-budget submission, the Confederation of Indian Industry (CII) has proposed a five-year pathway to reach that level, starting with an allocation of 4.6% of GDP in FY27.
It has also suggested piloting outcome-linked funding in select states, where budget outlays would be tied to measurable improvements in learning outcomes, teacher training and gross enrolment ratios.
Not everyone is convinced the fiscal space exists. In its pre-budget analysis, Systematix noted that over the past five years, government revenue spending, including social sectors like education, has grown at an average of just 2.1%, lagging nominal GDP growth. EY’s Economy Watch has similarly argued that long-term fiscal frameworks should integrate social-sector needs into 10–25 year projections to account for demographic shifts.
Regulatory reset on the agenda
Beyond funding, regulatory reform has emerged as a key theme in the sector’s budget pitch. According to CII, an effective reset in how higher education is regulated in India is required. Bodies such as the UGC and AICTE should move away from detailed, rule-heavy supervision towards principle-based governance that focuses on outcomes rather than process.
In practice, this would mean regulators acting as facilitators of innovation, intervening only when standards are breached, while institutions gain greater operational autonomy. The proposed single-window clearance system, with approvals capped at under 12 months, is aimed at cutting through the multiple layers of permissions that currently delay the setting up of private and hybrid universities, reducing uncertainty for investors and speeding up capacity creation.
Allowing institutions to self-declare their governing principles on their websites is intended to replace checklist-driven compliance with transparency-led accountability, where colleges and universities publicly commit to their academic, administrative and fee-related norms, and regulators step in only if these stated commitments are violated, or students’ interests are compromised.
‘Internationalisation at home’
Another major budget expectation is what CII has termed “internationalisation at home”. Indian students spent an estimated $44 billion on education abroad in 2024, a figure projected to rise to $91 billion by 2030, according to the industry body.
In order for this to be implemented, CII has urged the government to accelerate the approvals for top-ranked foreign universities to set up campuses in India.
It has also proposed replicating the GIFT City model through the creation of “education parks” across states, offering ready infrastructure and fiscal incentives to attract global institutions and domestic private universities alike.
AI in classrooms, not just labs
Technology integration, especially artificial intelligence, is the fourth pillar of the sector’s budget pitch. As per Deloitte, AI-driven education platforms should be treated as digital public goods capable of driving regional development and productivity.
The industry bodies also call for project-based AI learning modules to be introduced across the schooling-to-university pipeline to build foundational AI literacy.
CII has also proposed setting up AI education and research hubs in central and state public universities, supported by AI labs and cloud-based systems under the IndiaAI Mission. It has recommended allocating Rs 10,000 crore to extend digital public infrastructure into the education sector, covering open learning platforms and AI-enabled skilling tools.
Skilling, not just degrees
Vocational training and sector-specific skilling are another focus area. CII has urged the rollout of a national vocational training roadmap across all government K-12 schools, funded through a 75:25 Centre-State model and implemented with private-sector partners.
Deloitte, meanwhile, has flagged skill gaps in high-growth areas, recommending scholarships and tax credits for training in core insurance operations and actuarial science.
In healthcare, Deloitte has proposed expanding recruitment pathways to include 10+2 and intermediate graduates in structured clinical and allied roles to address workforce shortages. CII has also backed the creation of a National Industry–Academia Council to co-design curricula in emerging domains such as quantum computing, biotechnology and green technology.
Teachers, schools and access
School education and teacher quality have also made it onto the budget wishlist. CII has recommended a centrally supported programme for mandatory annual two-week in-service training for all teachers, along with a National School Leadership Certification framework for principals. It has called for the expansion of scholarships, free learning materials and rural transport schemes to improve access for disadvantaged students.
The industry body has also suggested strengthening School Management Committees and introducing social audit mechanisms to improve transparency and outcomes.
What industry is saying
“With record allocations across the board in the last Union Budget, India’s infrastructure growth is no longer constrained by capital but by the availability of industry-ready talent,” Tapash Kumar Ganguli, director-general of NICMAR, said. “Specialised education in construction, real estate, infrastructure and project management is critical to bridging the academia–industry gap.”
Siddharth Banerjee, CEO of Univo Education, said the upcoming budget must embed AI across the education ecosystem. “With India’s youth forming the world’s largest demographic cohort, investment should focus on building skilled talent, accelerating digital transformation, and strengthening institutional capacity to leverage this dividend,” he said. “Targeted investments in digital infrastructure can expand high-quality online education at scale.”
Ayush Kumar, managing director of New Delhi Institute of Management (NDIM), said management education in particular needed a structural rethink. “Management education today is no longer limited to classrooms; it is about building leaders for a digital, AI-driven and entrepreneurial economy,” he said.
He added that the budget should also focus on affordability, calling for enhanced education loans, interest subsidies and tax benefits for students and parents. “A forward-looking Budget that treats education as a national investment rather than an expense will go a long way in shaping India’s next generation of business leaders and job creators,” Kumar said.
Whether the fiscal math allows for a sharp spending step-up remains an open question, the answer to which will unfold on February 1.