What are Expected Announcements for the Education Sector?
If there is one thing that can really propel the Indian economy to the next plane of growth, it is the education sector. After all, education is what creates the soft infrastructure for the economy. Bridges, roads, ports and airports can make a bid difference to trade, commerce and to overall growth. However, many of these advantages would come to naught if the supporting push from education is not there.
One of the big advantages that India has over other high GDP countries is the high proportion of young people in the Indian population. That is called the demographic dividend. But that can only yield dividends if the youth is appropriately and adequately educated.
There is also an aspect of employability. Mr. Narayana Murthy of Infosys has often said that most engineers in India learn things that are divorced from reality and hence are not employable. This gap has to be bridged.
What the Education Sector Expects from Budget 2022?
Let us look at some of the key expectations from Union Budget 2022 on the education front.
1) As the Indian education sector stands in a state of flux due to the pandemic, the Budget 2022 is expected to put extensive focus on education sector. In the previous budget, the allocation to education was cut by 6% to Rs.93,200 crore. This needs to be doubled to Rs.200,000 crore.
Remember, India’s allocation to education as a share of GDP is woefully short of what other BRICS nations like Brazil, China and Russia are investing.
2) The pandemic has highlighted the tale of 2 Indian economies. The rural economy has been largely disadvantaged due to the lower access to electronic equipment, laptops and other education material. The government must have a separate allocation to ensure that supply of laptops to all school children free of cost is made a mandatory part of the Education charter.
The impact can be huge and make up the cost many times over. It will improve the quality of education that can be imparted across India.
3) It is time to enable wider access to research grants. As the National Education Policy aims at dismantling the man-made barriers, the Universities in the country need to adopt, not only a liberal framework, but also foster strong research.
The government is expected to bring the policy to allow graded access to research funds for high-quality education. Compare the contribution of Indian universities to the global research pool with the universities in the US, Europe or Asia and the gap is visible. It is time the government spends to bridge this gap.
4) An innovative way to reach out to a large audience is to leverage the muscle and reach of EdTech start-ups. Many of these start-ups have been disseminating the skills as well as the conceptual knowledge but a program of special financial support from the budget 2022 in the form of funding support and longer-term tax exemptions will go a long way. To begin with, scrapping GST on education of all kinds can be a big boost.
5) Let us turn to education funding. Today it is possible to get education loans for higher studies but those who have tried for it will tell you how tough it is. For starters, the loan period is restricted to just 8 years, which needs to be increased to 15 years.
Secondly, the rate of interest on education loan is higher than a car loan. It is essential to subsidize with an interest rate subvention of 400 to 500 bps. Lastly, most banks insist on security, which defeats the purpose of education loans. Banks should be allowed capital adequacy exemption for education loans to encourage them to give out such loans.
6) One way is to give a special incentive on the lines of Section 80C for contributions to education plans of mutual funds. This will not only create structures but also incentivize the people to save for the education of their children. Such funds can be made free of capital gains tax up to a limit.
7) Finally, if India needs to boost higher education, it must encourage the development and nurturing of an institution on the lines of Sallie Mae (Student Loan Mortgage Association) in the US. Such bodies have the guarantee of the government and are allowed to securitize the education loans of banks and convert them into securities. This can go a long way in boosting the education sector.
The Budget 2022 must take a holistic view of higher education and primary and provide the necessary drivers. It is high time and Budget 2022 is the right time to do it.
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