Union Budget 2023: Students' Expectations

Ankit Mehra Jan 30, 2023

The expectations from the upcoming Union Budget 2023 for the education sector primarily rest on the implementation of the ambitious NEP and the need to expedite its execution. The UGC draft regulations for 'Setting up and Operations of Campuses of Foreign Higher Educational Institutions in India' is a positive sign. While the recent ASER report showing increased school-level enrollment on the surface paints a positive picture, it also points to a dip in children’s basic reading and arithmetic abilities, confirming ‘learning loss’ and highlighting the need for increased investments focused on improving the quality of education. Edtech was touted as a solution to improve quality and continuity of education, but concerns regarding misselling courses and malpractices have marred the sector.

For the Union Budget 2023, the expectations are as follows:

Increased budget allocation: In the 2022-23 Union Budget, the budgetary allocation for the education sector was only 2.6 per cent of the total funding which is much lower than the recommended figure of 6 per cent of GDP outlined in NEP 2020. It is expected that the overall budget allocation to the education sector will increase significantly to address the issues in both the primary and higher education space. Budget allocation to higher education, most notably skill development, needs to increase significantly if we are to capture the demographic dividend and not run the risk of it becoming a bane.

The government plans to increase the Gross Enrollment Ratio (GER) in higher education to 50 per cent by 2035, with 35 million additional students in the higher education system. For this, a budgetary fillip to the expansion of infrastructure - physical and research, faculty development and technology-enabled learning will help fast-track the GER.

Strengthening of the digital education infrastructure: Since one of the main goals of NEP is expanding access to education for all, the government needs to focus on strengthening the digital infrastructure by improving internet connectivity, providing affordable 5G services and devices, and providing support for the delivery of online training, such as online learning platforms, virtual classrooms and training centres for the last-mile access. A blended learning approach with traditional and technological intervention is needed. Setting up a digital library ecosystem is also expected. The ecosystem can work with digital universities planned.

Tax incentives in the edtech sector: Edtech sector is growing rapidly on its way to becoming a $30 billion industry by 2030.

With the recent news of misselling and malpractices in this sector, it is expected that some regulations will be implemented to safeguard students and parents. It is important that the customer confidence in the role of technology is not eroded by the missteps of some players in the ecosystem.

The government should bring in tax incentives to aid the industry. Educational services are levied 18 per cent of GST. It deters widespread acceptance of online training and upskilling. The upcoming budget should make educational services affordable through tax exemptions and lowering the GST. Shifting educational products and services to a 5-12 per cent tax band will give the sector a much-needed boost and improve the ease of business. It is imperative to aid the industry's growth and further digital literacy.

Increased autonomy for education institutes: The government initiative of allowing overseas universities to set up campuses in India is a welcome step. The project will also, up to an extent, solve the potential revenue loss from students going abroad, which currently stands at US$17 billion, according to the India Skill Gap report. In line with the recommendations in the draft proposal, policy changes to allow greater academic and administrative independence for domestic colleges will be another positive move. Promoting university endowments similar to US universities can be a potential game changer for higher education.

Section 80E coverage to include various lending institutions: Sec 80E of the Income Tax Act allows for tax deductions for the interest paid on education loans. However, loans availed from banks and one NBFC qualify for this deduction. Expanding the scope to cover all NBFCs will allow for a level playing field while reducing the total cost to the end consumer.

One of the main goals of NEP is to move away from the outdated focus on rote learning and instead promote critical thinking technology-enabled teaching, provide a diverse range of educational pathways and increase access to education for all. Budget 2023 needs to focus on expanding the reach of the education system, especially in rural and remote areas. While the NEP is ambitious and expected to bring significant changes, it lacks a clear implementation plan. It also does not address the issue of funding leading to ambiguity among educators regarding the implementation of the policy. We hope the upcoming Union Budget 2023 will address the issues and improve the education system of India.