Budget 2025 expectations: How will FM Nirmala Sitharaman budget for education and skills development?

Budget 2025 expectations: The education and skill development sector is at a critical juncture. All of its major segments- pre-school education, school education, higher education and skill development have extensive expectations from the 2025-26 budget.

The private sector pre-school segment is gradually formalizing. The segment under the Government is developing across Ministry of Health and Ministry of Education through Anganwadis and Balvatikas and through Vidya Pravesh program. There is a need for large scale preschool set-ups and extension of primary schools to include pre-school segment, infrastructure and facilities upgrade, convergence and coordination, teacher hiring and teacher development etc. Specific allocation may be made in the upcoming budget for this important segment.

The most critical needs in the school education today are achieving Foundation Literacy and Numeracy by grade 2, achieving grade-appropriate learning for all students, moving from rote-based learning to conceptual and application-based learning and reducing dropouts, particularly in secondary education. In particular, there is a need to reduce dropout among girls and among children from disadvantaged sections of the society in secondary and higher secondary education. It is expected that the budget would be significantly enhanced for the Samagra Shiksha and Nipun Bharat Schemes to address these challenges. Additional allocation may be made for assessment reforms and for pre-service and in-service teacher training.

The pressing challenges in Higher Education segment are around access in several underserved districts and for women and for disadvantaged sections that affects GER, quality, research orientation, and integration of employability-linked skills. To address these key areas, the budget is expected to provide higher allocation to PM USHA scheme and also to fund new universities, and expansion of capacities in existing institutions. Initiatives like the Madan Mohan Malviya Mission for faculty development under UGC may also attract additional funding. Also expected are new initiatives for expanding skill development in higher education and for enhancing quality through greater impetus on research and by strengthening standards, assessment, accreditation and ranking frameworks in higher education. The Government recently provided access to research journals to all students in government higher education institutions in the country through ‘One Nation One Subscription’ initiative. Initiatives are also required for building research competence and for creating ease of research, research partnerships, patent filing, and for securing research funding. New initiatives could also be announced for upgradation of Polytechnics and Engineering colleges especially in areas like AI & ML, robotics, IoT, smart manufacturing.

The skill development segment is in need of improvement in quality including through greater Industry-connect and industry participation. Several of the components of PM Package announced in 2024 including skilling of 2 million students over 5 years through ITI upgradation, skill loans up to 7.5 Lakhs, Employment-linked incentives and internship schemes targeted these challenges. Initiatives may be added to complement these ongoing efforts.

Across many of the above segments, quality enhancement, private sector participation, women and disadvantaged group participation, and technology leverage are common themes. The upcoming budget may target these areas through enhanced funding for new academic institutions (universities in the higher education segment and cluster schools and exemplar schools in school education segment), girls hostels, scholarships, student loans, and through technology applications for learning and for education management.

Union Budget 2024 allocated 1.48 L crore, a 30% annual increase from previous year. NEP 2020 targets an allocation of 6% of GDP. It also places the highest priority of the education system to achieve universal foundational literacy and numeracy in primary schools by 2025. Additional allocation for NEP implementation and a significant increase in the overall budget is likely to be a theme for the upcoming budget. The government may also facilitate a more direct private sector participation in both school education and higher education segments.

About 1.33 million students were pursuing higher education abroad till January last year as per MEA reply in Lok Sabha, while around 50,000 foreign students study in India mostly from friendly countries and through Government and India and bilateral scholarships.For India to address this imbalance, a significant funding is required to enable Indian institutions to set up campuses abroad and to attract foreign students and attract universities of global repute to India. The upcoming budget may allocate funds for implementing this internationalisation agenda of NEP 2020.

How the FM budgets for education and skills in the upcoming budget may have a significant impact on how this critical sector faces the challenges it faces at present. This budget could indeed be a watershed year for the growth of education and skills. That will play a major role in India realizing its demographic dividend, its youth realizing their full potential and India becoming a development country.

Authored by:

• Kamlesh Vyas, Partner, Deloitte India
• Mansi Mathur, Assistant Manager, Deloitte India