Budget impact on education sector: EY

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Expectations from the Finance Minister tend to surge in the run-up to the Budget each year, and in recent times, never so much as they did when the incumbent Government returned to power. The plethora of demands from academics, administrators and industry require action by a group of stakeholders, only one of whom is the Finance Minister. All quarters and requests are in the best of times hard to cater to; needless to say, it is a herculean task to juggle the twin objectives of growth and fiscal prudence in an environment being shaken by the tremors of recession.

If the Ministry of Human Resource Development sounded the bugle with a 100-day plan for education, the Finance Ministry has echoed the need for focus on female literacy, subsidisation of financing costs for higher education, role of Information and Communication Technology (ICT) in education, upgradation of polytechnics and expanding the coverage of IITs and Central Universities.

Key policy initiatives include the launch of the National Mission for Female Literacy with the stated objective of reducing female illiteracy within 3 years by 50% of the current levels. Around half a million students from economically weaker sections of society are expected to benefit from the interest subsidy that has been granted during the moratorium period on loans taken by them from banks to pursue course from recognised institutions. In addition, Pre and Post-Matric scholarships have been provided to minorities and grants to the Maulana Azad Education Foundation have been almost doubled.

Missions that have benefitted from the largesse of the Finance Minster include the 'Mission in Education through ICT' (Rs 9,000 million) and Skill Development Mission (Rs 4,950 million for set-up and upgradation of polytechnics). Taking Indian Institute of Technology (IITs) and engineering education to the wider populace and achieving the standards set by the original IITs and National Institute of Technology (NITs) is no easy task - but an early beginning and fiscal support are sine qua non. Not to lose sight of sustaining the quality benchmarks of the earlier institutions, the Budget has made an allocation of Rs 21,130 million for IITs and NITs [Rs 4,500 million for new IITs and NITs]. An allocation of Rs 8,270 million has been made for setting up a Central University in each of the uncovered states.

The Punjab University at Chandigarh stands to benefit from a proposed allocation of Rs 500 million with the objective of offering better infrastructure to students. A sum of Rs 1,000 million has also been provided to the Indian Council of Forestry Research and Education, Dehradun in recognition of its excellence in the field of research, education and extension.

The inherent discrimination in providing a deduction for interest on loans taken for pursuing Higher Education in select areas has been done away with, by an amendment in the income-tax statute, which now extends the ambit of this deduction to all fields of study, including vocational studies.

The crying need for the reforms in education is now too clichéd to repeat here; the test shall however be of the wherewithal of the Government to build the much needed consensus amongst varying stakeholders (including the regulators and the State Governments) to implement its well stated and noble intentions.

The Budget is just a small but nevertheless, a good beginning and one hopes that in the opening remarks made by the Finance Minister (on July 6) outlining the policy objectives of the new Government there lies a portent of greater and more radical change for the sector:

"Create a competitive, progressive and well regulated education system of global standards that meets the aspiration of all segments of the society".

Ashwin Ravindranath is a senior tax professional with Ernst & Young, India.