In the Finance Bill 2009, nearly 9 billion INR (approx. $189 million) has been allocated to spending on higher education. This is a 36% hike on spending for higher education over the previous financial year. Let’s first look at the actual provisions of the budget. All information below has been taken from the official budget site (PDF link) of the Government of India.

  1. Student loans for the economically weaker sections of society: Full interest subsidy for the moratorium period for loans taken from scheduled banks to study any approved course in any recognized institution in India. This basically translates as an exemption from payment of interest for any loan taken, until one year (usually) after the end of studies. In other words, if I take a loan for pursuing an MBA degree, I don’t pay it back until I get a job, or for one year after the end of my studies (whichever is earlier.)
  2. INR 900 crores (INR 9 billion) for education and INR 495 crores (4.9 billion) to set up and upgrade polytechnics.
  3. About 9 billion to set-up Central Universities in states that don’t have any.
  4. About 20 billion for IITs and NITs of which 4.5 billion is for setting up of new IITs and NITs.

That’s the only information we have about proposed budgetary spending for education in India. This table (PDF link) details the total expenditure by department/ministry. Here is the summary of the department relevant to this post.

As you can see, total expenditure on school education and literacy is around 20,000 crores (200 billion), in 2007-08. It increased to about 260 billion in 2008-09. Total planned expenditure for 2009-10 is around 290 billion. In comparison, spending on higher education has gone up from 62 billion in 2007-08 to around 159 billion in 2009-10. In other words, there has been a 130% increase in total spending on higher education over the last 3 years, compared to a mere 40% for school education and literacy.

Now, there seems to be a basic problem in this spending pattern. Although, in absolute terms, spending on primary education exceeds spending on higher education, it still works out to very less. Consider this, in 2001, roughly 35 percent of India’s billion-strong population was less than 15 years of age. (Source) This is the section of the population that is concerned with primary education. The total number of persons concerned is thus about 350 million. A total expenditure of about 30 billion for 350 million persons is about 85 rupees per person. This amount is negligible by almost all standards. Considering the abnormally high drop-out rates in India, the challenge of achieving total literacy is even higher.

Now, it’s not as if spending on higher education must be cut. However, it is important to remember that primary education is the stepping stone to progress. Unless children go to school and get educated, spending on higher education will be meaningless. Also, subsidizing higher education makes no sense to me. Giving fee concessions for students in universities does not solve the problem. This is especially true with the IITs and NITs. Making credit freely available and encouraging banks to check only the capacity of the student to get a job and pay the money back will go a long way in getting students from underprivileged families into college. It is not important to give free education. It is more important to impart quality education, especially in the tertiary education sector.

Facilitating access to centres of excellence in higher education, especially for economically backward sections of society can be done simply by removing the financial hurdles that exist today. The IITs are a case in point. It is extremely difficult to gain access to any of the IITs. The creation of new IITs and NITs will only solve this problem to a certain extent. It is more important to ensure that the existing IITs and NITs do not lose their relevance and quality in the endeavour to create new ones. In other words, an increase in the number of such institutions must not compromise quality. To ensure this, spending on upgradation and maintenance of infrastructure is essential. What is neither required nor advisable is subsidising the tuition fee, or lowering the entry barrier by relaxing the norms for reserved categories.

Much can be done for higher education within the existing framework. Primary education, on the other hand, requires a complete overhaul. The National Literacy Missions don’t seem to be working too well. The school dropout rates are still alarmingly high, and show no signs of dropping. Female literacy is abysmal, especially in rural areas and in the BIMARU states. Correcting these anomalies require, not just money, but also political will. Sadly, for our government, it seems to be taking a back seat. Catering to the IT and ITeS sectors seem to take priority, with the government going out of its way to provide engineering education and training at the cost of basic literacy programmes.

The need of the hour is to address basic concerns regarding primary education. Ensuring that primary schools exist and function in rural areas (at least one in every village) is essential. Even the one-room schools that do exist suffer from lack of amenities and even teachers. Providing of drinking water, sanitation and a comfortable learning environment will also greatly help. Of these, sanitation is especially important if we want to keep girls in schools at least until they are 14. Many girls drop out of schools due to the complete absence of toilets in the schools. The noon-meal scheme that worked so well in some Indian states needs to be properly implemented, ensuring that the children get a nutritious and well-cooked meal, at least once a day. These measures are already in place. It just requires budgetary allocation, and more importantly, political will to function properly. Whether it will actually happen is the million-dollar question.

Higher education and Budget 2009

One thought on “Higher education and Budget 2009

  • August 4, 2009 at 3:24 pm

    Hi.. I came across this blog while searching for the details of education loan in budget 2009. Could you let me know (mail me) if any amendments have been made concerning the interest rates for education loan for pursuing higher studies outside India

    Sorry. I truly have no idea. All the info I got were from open-source sites.


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