Budget 2015: Implications for the education sector

There was much expectation from the Finance Minister in the education and academic industry from this year's Budget. If India has to achieve GDP growth of 8 per cent, then it needs a skilled, trained and educated workforce to make it possible.

Poornima Shenoy        Last Updated: February 28, 2015  | 21:00 IST

Poornima Shenoy
There was much expectation from the Finance Minister in the education and academic industry from this year's Budget. If India has to achieve GDP growth of 8 per cent, then it needs a skilled, trained and educated workforce to make it possible.

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1. Expenditure on education: Rs 68,960 crore has been set aside for education and mid-day meals. It should address the problems of primary education and improve retention of students at the school level. It should be more than just investing into physical infrastructure for higher education alone.

2. Skills development: Skills development has the largest impact in the education sector from this Budget. It will lead to job creation at the bottom of the pyramid.

The government is investing heavily into sectors like infrastructure, energy, and manufacturing, Swatch India, Clean Ganga and Digital India. This means skills-based training to produce industry and work ready talent. The proposed Skill India and National Skill Mission will consolidate skills across 31 sectors.

3. Digital India and digital education: The Budget did not get into the 'Digital India' initiative, whose goal is to enhance digital infrastructure, deploying e-governance and e-services. There were expectations on substantial budgetary allocations to further the digital education agenda. MHRD (Ministry of Human Resource Development) has also announced its first set of MOOCs (massive open online courses), and allocation to develop a rich variety of content for these courses was highly anticipated. It can be a meaningful way for improvement in higher education enrolment and can help learn-as-you-work.

4. Major institutions: The FM was not populist in announcing IITs, IIMs and other new institutions of higher learning across the country. Attracting globally recognised academics of Indian origin or from elsewhere is an important point and this needs to be proactively addressed at these institutions.

5. Visas: Visa- on-arrival from 150 countries will help attract researchers, academics and students. This could further help create India as a global hub for education.

6. Student loans: The FM made a bold statement when he said that no student should have to miss higher studies due to financial constraint. The success of the student loan scheme will lie in its fine print.

7. Start-ups: Setting up SETU (Self-Employment and Talent Utilisation) with an outlay of Rs 1,000 crore to support start-ups is a plus for young companies and technologies. Microfinance for entrepreneurs will enable young companies to be created and to grow in a sector that has a long gestation period. Public sector banks do not provide working capital to technology, e-learning and content companies in this sector as they are unable to understand the models.

Start-ups in service sectors like retail, e-commerce, training, education, etc. are excluded from the CGTMSE scheme of the Indian banking system. They would receive great encouragement and support if such facilities are extended to these sectors.

8. Royalty Tax: Reduction of the Royalty Tax would have a positive impact on digital and online learning companies. While education institutions are eligible to heavy discounting from corporates, companies supporting the sector did not get the same benefits.

The principle of these policy decisions were sound and made for a positive and impactful Budget. While government plays the role of policy maker, success will take place when the private sector is permitted to play a larger role in implementation. This means quicker decision making, transparent transactions and smoother fund flows.

The author is Founder & CEO of Latitude Edutech, an e-learning company

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