It’s that time of the year again. The industry is abuzz with Budget-centric debates and discussions with increased focus and expectations from the finance minister. Everyone in the education and academic industry is hoping that the government will announce big-ticket reforms this year to meet the overarching objective of transforming India as the knowledge and skill capital of the world.
Reaping our demographic dividend: The Indian socio-economic fabric is in the midst of a major change. This can be largely attributed to its growing young population, with more than 50% of its population or 600 million people under 25 years of age, which puts the country at the crossroads of either capitalising or losing out on the biggest opportunity to make a global impact.
The sunrise sector—potential waiting to be tapped: Valued at over $160 billion, India’s education sector offers tremendous potential for investment whilst making a significant social impact on the lives of millions of people. The need of the hour is to introduce reforms, increase budgetary allocations and invite foreign and private sector investment.
Increasing public sector expenditure: Accepting the recommendations of the Kothari Commission and the National Education Policy by allocating at least 6% of GDP to the education sector is needed.
Attracting foreign and private investors to the sector: Given the massive demand-supply gap of quality education across the country, even the increased government expenditure will fall short. It is, therefore, imperative to attract foreign and private investors to meet the dual objective of creating additional infrastructure and improving quality.
Making education and skilling affordable: Reducing interest rate on education loans, widening the scope to include skilling and establishing dedicated finance corporations to meet the growing demand. Also, increasing limit of collateral free education loans from R4 lakh and extension of credit facilities so that students can subsequently repay after securing a job.
Driving education tourism: Education tourism in India has considerable potential given our rich heritage. Such a move can also attract teachers and institutions from across the world interested in studying and teaching our culture, demographics, society and history.
Continue to incentivise formal skilling: With less than 2% of our population formally skilled and with an ambitious target of skilling 500 million by 2022, the government needs to substantially increase this allocation to attract youth to enrol for formal skilling programmes.
Enhancing deduction on tuition fees: At present, the deduction is provided under section 80C with a limit of R1.5 lakh. Given the increasing cost of education, the government should consider providing a separate limit for deduction towards tuition fees.
Increasing investment in MOOCs and virtual classrooms: Technology can play wonders in addressing the challenges of access, equity and quality in this sector. In the last year’s Budget, a sum of R100 crore was allocated towards these innovative technology solutions. The government needs to increase allocations and establish a separate body for management and operations.
Revisiting withdrawal of service tax exemption: The government should consider reinstating the service tax exemption clause for those renting immovable property to educational institutions, which was withdrawn in last year’s Budget.
Better late than never
The Centre and some states have become increasingly cognisant of this sector’s high growth and impact potential. During the last fiscal, the budgetary allocation received a 12.5% boost, reaching an all-time high of 3.4% of total GDP. This allocation needs to be almost doubled with an increase in focus and efforts to ensure effective channelising of funds towards achieving key priorities.
The recent impetus towards increasing the growth of manufacturing sector through the “Make in India” programme can only achieve its desired targets if steps are taken to reform the education and skill development sector. A parallel programme called “Educate/Skill in India” can prove to be beneficial in addressing some of the pressing challenges and attracting global interests.
By Rohin Kapoor
The author is a senior manager with Deloitte Touche Tohmatsu India Pvt Ltd. Views are personal