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The emergence and rapid adoption of disruptive technologies such as AI and quantum computing mean that students currently studying in school and college will find a work and life environment that is very different from what they were used to. Budget 2024, with its potential to significantly impact the allocation of resources to the education sector, will play a key role in how the Indian economy handles this change.
Since education is part of the Concurrent List in the Indian Constitution, both the Centre and the states have rights and responsibilities to allocate budgets and formulate educational policies. The total budgetary expenditure on education as a percentage of GDP is about 3.5%; however, the Centre bears only one-fourth of the total government expenditure on education, while the remaining three-fourths comes from the state governments.
Investment in education is the least shared factor for solving most of India’s long-term challenges. For India to take advantage of the demographic dividend of a young population, the central government must increase its spending on education.
The importance of increasing expenditure on education to a minimum of 6% of GDP was first highlighted by the Kothari Commission in 1966. The 6% target was also reiterated in NEP 2020. We are currently well below that target. This expenditure needs to be increased to keep up with the race of AI and technology and to meet the basic needs of primary and secondary education.
Increasing expenditure is crucial to meet and go beyond the 6% target because even though the total expenditure on education is over Rs 1 lakh crore, the share of plan expenditure is only about 35 per cent. The remaining 65 per cent is non-plan expenditure which takes care of recurring expenditure related to maintenance and upkeep, salaries of regular employees and expenditure on operation and maintenance of assets created through development schemes.
Increased expenditure in education should be distributed equally between primary, secondary and higher education levels. Primary education is a resource for secondary education, which serves as a resource for higher education. Thus, all three sectors create the country’s final demand and output of education. Increasing government spending on research and development and encouraging the private sector to increase spending on research and development will be important to ensure the competitiveness of the Indian economy.
India’s current R&D expenditure is 0.65% of GDP; this is less than our counterparts in BRICS and less than the global average of 1.5%. We are on the cusp of an epochal transition where AI, quantum computing, CRISPR and similar revolutionary disruptive technologies will transform societies and economies as profoundly as the transition from an agrarian society to the industrial revolution of the 18th century. Technological revolutions will dissolve the traditional geopolitical divisions of global South and global North blocs.
India can ensure that it does not end up with the underprivileged and modernise the education system rapidly. We need to increase our spending on research to pursue innovation at a large scale. The private sector, which contributes one-fourth of our country’s spending on research and development, should be encouraged with tax breaks and other such steps to raise their share of spending to the levels prevalent in countries like Japan, the US and South Korea.
The most important change for modernizing the education system will be financial, but liberalization and regulation will also play a very important role. The quality of the higher education sector is a very important predictor of a country’s long-term competitiveness.
India, with its over 1100 universities and 44,000 colleges, has the third largest education system in the world. Yet, there is a huge skills gap between the requirements of the private sector and the skills offered by most of these higher education institutions.
Due to the lack of quality higher education institutions, India faces the challenge of educating nearly 30 percent of its 1.3 billion people. Public expenditure on higher education in India is about 0.6% of GDP, while in the US it is 2.7%. Bridging this gap cannot be accomplished by the public sector alone. Budget 2024 can aid this process by taking steps for reforms to increase private sector participation and by regulating the higher education sector. In 2023, the University Grants Commission (UGC) released its rules for setting up and operating campuses of ‘foreign higher educational institutions’ (FHEIs) in any part of India. This is one such important step.
Further improvements are needed on this front. This will not only enable greater investment in the higher education sector in India, but will also enable global best practices and research to reach our students faster.
conclusion
Lack of access to a modern education system was the main reason why the fruits of the industrial revolution and subsequent global geopolitical dominance went to the current Global North. Since then we have been playing a game of catch-up almost continuously. Young India has the aspiration and energy to reclaim its rightful global position. Increased budgetary outlay for education, as well as enabling reforms, are going to be crucial for India to do justice to its demographic dividend and reclaim its historical place in the global geopolitical order.
(Author Praneet Mungali is a trustee of the Sanskruti Group of Schools, Pune, and an educationist. Views expressed here are personal.)
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