1. A model to harness private investment needed

A model to harness private investment needed

While the Budget has taken steps to focus expenditure in line with long-term objectives as well as short-term priorities, the education sector continues to suffer from overarching funding constraints.

Updated: March 9, 2015 1:23 AM

The Budget FY16 has arguably generated more anticipation and expectation than any other central government Budget in recent history. For the education sector, announcements and allocations provide some valuable insights into the priorities of the government over the next few years.

Overall allocations to the education sector have reduced—to R69,000 crore in 2015-16 as against R70,000 crore in the revised estimates for 2014-15. Revised estimates themselves are lower than 2014-15 allocation (R82,777 crore). This is not necessarily a cause for concern—it is likely that states may be expected to shoulder a higher share of the burden as their share of tax revenue rises.

The Budget signals the government’s immediate focus on higher education. Poor quality of graduates has been a complaint of industry sectors over the last decade, and the focus on higher education seems to signal an attempt to address this issue; over 3 million graduates will be entering the job market every year, and improving their employability and productivity could be a quick win that the government is aiming at. Plan allocations to higher education have been increased by over 20% in this Budget. The Budget also announced the setting up of new premier higher education institutions; once these as well as the ones announced in previous Budgets are operational, India will have 20 IIMs and 23 IITs. Setting up of institutes of excellence as well as financial aid under the Pradhan Mantri Vidya Lakshmi Karyakram will improve the youth’s access to quality higher education.

The plan to consolidate skill development initiatives across ministries and standardise processes and outcomes across 31 Sector Skills Councils through the National Skills Mission is an initiative to coordinate skill development activities across sectors, and an attempt to align them to broader initiatives such as the Make-in-India. It is indicative of the government’s focus on improving efficiency and effectiveness through many of its initiatives and budgetary allocations.

Plan expenditure on school education has been reduced, reversing a trend of recent years; this is driven by reduced allocations to the Mid-Day Meal scheme and the Sarva Shiksha Abhiyan. The Economic Survey had highlighted concerns regarding the quality of outcome despite increased spending on school education in recent years, and more effective targeting and monitoring of expenditure is required. Reduced spending on existing schemes appears to indicate a wish to focus on new schemes to be developed and funded in future years, rather than a reduced emphasis on school education. The finance minister’s stated long-term vision of ensuring access to secondary education within a 5-km distance of all students is another welcome announcement; poor access to secondary education has been an important factor in the high drop-out rates in school education. The plan to upgrade 80,000 secondary schools and convert 75,000 junior and middle schools into senior secondary schools is an excellent first step in this direction.

While the Budget has taken steps to focus expenditure in line with certain long-term objectives as well as short-term priorities, the education sector continues to suffer from overarching funding constraints. Public spend on education in India remains far below levels achieved by most comparable developing economies. As this Budget highlights, fiscal consolidation objectives of the government will, in the foreseeable future, limit the central government’s ability to provide the step-jump in funding necessary for the education sector; what may be needed, thus, is a model to attract and harness private investment to bridge the gap. This could be the focus area for the government in the months ahead.

The author is associate director, Strategy, PwC India

Dushyant Singh

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