Opinion: There Is No Way We Can Become ‘Vishwaguru’ If We Cut Funding For Education In Union Budget

The International Monetary Fund has recently underlined the critical need for India to increase investment in education and health to effectively utilise its growing youth demographics for economic growth.

Source : PTI

Union Budget 2024: At a time when there is widespread criticism over the recent controversies surrounding important entrance examinations and related facilities, will the Modi 3.0 government increase allocation for education? This is the question on everyone's mind. All eyes are on the full Union Budget 2024 to be presented on July 23. 

The Indian civilization, one of the oldest in the world, and the Indian knowledge tradition have given a strong foundation to science and technology since ancient times. It was the Indian numeral system that made mathematics, business dealings, modern accounting and computer technology possible. Talented people like Aryabhata and Srinivasan Ramanujan have shown a new path to the whole world. 

There was a time when India had the upper hand in the world in terms of knowledge and education. At that time students from every corner of the world used to come to study. There were very big universities for education here, like Takshashila and Nalanda. It was Takshashila University where Chanakya, Charak and Sushruta studied.

Recently, Prime Minister Narendra Modi inaugurated the new campus of Nalanda University.

Then the question arises that how did the world leader country, which had so much capability in education and research, lag behind so much in education and research? Perhaps the biggest answer to this is that we have not paid as much attention to education and research as other countries have.

Education And Research: Where India Stands 

Major developed and developing economies have realised the importance of education in human development as well as the need to provide quality. Therefore, these countries allocate a substantial amount of budget to the education sector. India also needs to spend more on education.

This is not an issue for debate. Even though India has a large youth population, poor health and education spending is reducing their productivity and hurting the country's economic future. While countries like China, Japan and South Korea spent a lot on education in the 60s, our country is still waiting for a proper budget.

Public expenditure on education in India has been comparatively low since the beginning. Most states spend 2.5 to 3.2 percent of their GDP on education.

In 1964, the Kothari Commission had recommended increasing educational expenditure from 2.9 percent to 6 percent of the Gross Domestic Product (GDP), but even after five decades, the country's education budget has never been more than 3.5 percent of the GDP, although in NEP 2020 It has also been reiterated that the education budget should be 6 percent of GDP.

India's per capita GDP has now increased five times compared to 2005.

Free and compulsory education is a fundamental right for every child in the age group of 6-14 years under various articles of the Indian Constitution. Education, which is in the Concurrent List, has rarely been a priority for the central or state governments.

During 2004-05, the public expenditure on education was 3% of the GDP, and during 2008-09 it increased to 3.4%. Education expenditure declined to 3% of the GDP during 2009-10. During the initial period of NDA, education expenditure was 3.1% in 2014–15, which declined again to 2.8% in 2015–16. Since then, it has remained between 2.8 and 2.9 percent from 2016-17 to 2023-24.

Other developing countries are spending more than us, with China, Brazil and Argentina spending 4.2%, 6.2% and 5.5%, respectively. Even a poor country like Cuba is spending about 12 percent on education.

India is a young country with an average age of around 28 years.

South Africa, with a median age of 27, actually spends about 7% on education. 

India's expenditure on resource and development, which is about 0.7 percent of its GDP, is well below the world average of 1.8%.

According to a study conducted by government think tank NITI Aayog and the Institute for Competitiveness, India's expenditure on R&D is the lowest in the world.

According to the UNESCO Institute of Statistics, there are only 253 scientists or researchers per million population. This is much less than developed nations. The contribution of the private sector is less than 40% of the gross expenditure on R&D whereas it is more than 70% in advanced countries.

There are only 26 Indian companies in the list of top 2,500 global R&D spenders in the world. There are only 26 Indian companies in the list of top 2,500 global R&D spenders in the world, while Chinese companies have 301.

Meanwhile, according to a survey by the World Economic Forum, Indian parents spend the most time in helping their children study and complete homework. Indians spend an average of 12 hours every week helping children study. 

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Education Budget Cuts In Interim Budget

The University Grants Commission (UGC) has faced huge budget cuts this year. In the interim budget, funding for the UGC was reduced to Rs 2,500 crore from last year's Rs 6,409 crore, a decline of 60.99 per cent.  The allotment for IIMs has been reduced for the second time. At the same time, this time the school education budget has been increased marginally by Rs 500 crore. 

Education Cess Major Source Of Education Budget

To strengthen the education budget, the Government of India introduced a 2% education cess in 2004. The education cess has been replaced by a 4% education and health cess through the Finance Bill 2019. This cess is not a sustainable source of revenue for the government, yet the cess has financed 70 per cent of total education expenditure after 2015.

This means cess has become a regular way of education expenditure, which is a worrying factor. 

Problem Of Quality Education

Today, there are about 50,000 colleges and 1,100 universities in India, of which about 50 percent are in the private sector.

Over the past two decades, India's education sector has witnessed massive expansion in terms of schools, colleges, universities and enrolment. This expansion created two problems: lack of uniformity and quality.

The ASER 2023 'Beyond Basics' report published this year sheds light on youth aged 14-18 in rural India and reveals that 86.8 per cent of 14-18-year-olds in the country are enrolled in an educational institution. However, 25 percent of these students cannot read even Class 2-level text material fluently in their regional languages.

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Why India Must Invest In Education And Research

India's average per capita income in 2023 was $2,600. The states with good education level like Kerala, Telangana and Tamil Nadu have an average per capita income of around $4,000. In contrast, Bihar and Uttar Pradesh per capita income is less than $1,000, and they are lagging behind in education.

UNESCO and World Bank studies estimate that every dollar invested in primary education yields a 15–25% return on investment. The current allocation for primary education in India is a mere 4-5% of the GDP, which is less than the internationally recommended 6-10%.

Early education lays the foundation for lifelong learning, and it is important to ensure access for all. The Sarva Shiksha Abhiyan was launched in the country, but the literacy rate is not only low on paper but on the ground too.

India's education sector ranks a dismal 39th out of 67 countries in the IMD's World Competitiveness Rankings 2024, with only 40 per cent of all graduates considered employable. We need to invest in skilling the labour force.

We are proud to be a young country, but our population will not remain young for long, hence the education budget should be increased immediately.

Developed countries are worried about their ageing population. Today, countries like Canada are encouraging new Indian graduates and post graduates to start jobs there.

We are also lagging behind in terms of intelligence (IQ). With an average IQ of 77, India is ranked 96th globally while China has an IQ of 104 and is ranked 5th. It is imperative to bridge this intellectual gap, and this is possible only if the education and research sector is given adequate promotion in the upcoming budget. 

At a time when we aim to achieve Gross Enrollment Ratio (GER) of 50 per cent by 2035 and dream of a developed India by 2047, I feel that education expenditure as a share of GDP needs to be improved. An increase of 1.5 percent could be the first step towards a major change. 

For this, not only the government but also the corporate and private sector should extend their full cooperation. We have seen that political tussles between the state governments and the central government always hinder the strengthening of primary and secondary educational infrastructure, and hence unless the entire country is united in this, we will continue to lag behind in the education sector.

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Future Actions And The Way Forward 

Just as a ship that forgets to map new waters runs aground, a nation that fails to invest in education and research will run aground. Israel has shown that despite being a small nation, sustainable development can be achieved by prioritising investment in education and research.

To truly have a strong economy, the country needs to have a long-term and meaningful level of knowledge system that powers the economy. The more intellectual property is created, the more employment will be created. 

Recently, the International Monetary Fund (IMF) has underlined the critical need for India to increase investment in education and health to effectively utilise its growing youth demographics for economic growth. 

There is a need to create a dedicated fund for climate technology and AI startups in the upcoming education budget.

According to a survey by ASSOCHAM, considering the rapidly increasing cost of education in the country, the Goods and Services Tax (GST) on educational services should be reduced from 18 percent to zero.

For some courses, higher education is becoming beyond the reach of the common man. Today, fees up to Rs 40 lakh have to be paid to do an MBA from an IIM. Foreign direct investment in the education sector should be increased in the country by adopting the Singapore model. The need of the hour is to invest the money spent in the various 'rewri schemes' (referring to freebies) running in the country and the states in the education sector.

It will be important to promote collaboration between fintech firms and educational institutions to enhance skill development.

A large part of the student community depends on educational loans to pursue their dream courses. Fellowships in higher education should be increased and interest rates on education loans should be halved and the tax burden on universities reduced.

Common taxpayers should also get tax exemption on ed-tech expenses under Section 80C.

By identifying big corporate houses, 75% of their Corporate Social Responsibility (CSR) money should be mandatorily invested in education and health sectors.

In order to ensure that the workforce is well-prepared for the future, it is imperative that the Union Budget 2024 includes ample provisions for the upskilling of teachers. This will enable schools and colleges to transform into 'learning organisations'.

Dr. Brajesh Kumar Tiwari is an Associate Professor at Atal School of Management (ABVSME), Jawaharlal Nehru University (JNU), New Delhi.

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