How can the Union budget help better finance the education sector?

WION New Delhi, Delhi, India Jan 25, 2017, 07.56 AM(IST) Written By: Kiran Bhatty

We need to ask the government as to how it expects the school or the parents to pay a fee that it, by its own admission, finds exorbitant and unaffordable? Photograph:( Others )

The annual budget of the government of India, also called Union Budget, is the annual financial statement of the estimated receipts and expenditure of the government for the particular fiscal year that runs from 1st April to 31st March next year. As the people of the country eagerly awaits the announcement of the budget, the kind of questions that make rounds are: will the government spend more than the previous year on the infrastructure or defence, on health or education?


Additionally, state governments also present their statements of expenditure and receipts. Education being a ‘concurrent’ subject, both the central and the state governments contribute funds towards education. Central funds are dedicated to what are known as centrally sponsored schemes, such as Sarva Shiksha Abhiyan (SSA) and Rashtriya Madhyamik Shiksha Abhiyan (RMSA) - the equivalents for “education for all” at the primary and the secondary level. State budgets usually add a matching share to the central grants and contribute to other aspects of education expenditure.


Over the years, the government’s thrust on infrastructure and economic growth have meant that the social sector has been relatively neglected in the financial accounting done by the government. 


Having realised the dire need of the education sector, the education commissions, particularly the Kothari Commission of  1966 have recommended that at least 6 per cent of the GDP be spent on education. Unfortunately, however, expenditures have never exceeded 4 per cent of the GDP. 


Recently, calls for fiscal prudence have meant that expenditures in the social sector have been particularly affected; the current expenditure amount to less than 3 per cent of the GDP. Every year, therefore, educationists find themselves feeling disappointed as they hope in vain for a government that changes this downward trend. 


State shares have followed similar trends, with some state-wise variations. For instance, Himachal Pradesh, a small state in the north has been regularly spending 6 per cent of its state GDP on education. The results are there to be seen, as Himachal has climbed to the top in education statistics in many respects such as enrolment, attendance, gender parity etc.


However, the consistent decline in the Union Government’s share in the budgetary allocations to education has shifted a greater responsibility to the state governments. As the demand for resources has increased over the years, the competition among states for funds from the centre has correspondingly increased too. This has often led to confrontations between state governments and the Central government on the issue of devolution of funds.


Last year, the Fourteenth Finance Commission made some radical changes in the manner and form of allocating funds between the Centre and the states. The changes suggested by the Commission include an increase in the devolution of central taxes to states and a reduction in the number of grants controlled by the Central government. These changes are in many ways the outcome of the abolition of the Planning Commission. 


These recent changes are bound to have a direct impact on the provisioning for education at the state level. According to the latest available data from the Ministry of Human Resource Development [MHRD], about 68 per cent of the total education budget goes towards school education and the remaining 32 per cent towards higher education, technical and adult education. 


Despite the higher share going towards school education, the fact that India is yet to universalise elementary education implies both that a larger quantum is required to meet the needs, especially to meet the needs of the Last Mile Learners, that is, children who have dropped out of school.  


The other problem is, financial resources are not translating into adequate interventions on the ground. It further points to the fact that there are possible gaps even at the budgeting stage; money is not being allocated to areas that would have a greater impact, such as teacher training, inspection and monitoring as well as infrastructure strengthening. 


Will states step in to fill these gaps in education budgeting remains an open question.


Another implication of the Finance Commission recommendations relates to decentralisation. It has been suggested that funds be transferred directly to the local government for disbursement in accordance with local needs. While this is clearly a welcome move, the capacities of local governments to plan and disburse funds is highly deficient. 


Hence, it would be prudent to invest in building the strengths of local governments if such measures are to have a positive impact.  Our desired goal should be of enabling decentralised governance in education.


Another question that is raised in the context of education financing is the wisdom of making education dependent on an annual financial cycle. Since outcomes in education have a longer gestation period, financial planning for education should involve longer time-lags. Evidently, it is already time that governments made allocations for education based on a longer time frame. 


Finally, since the passage of the Right to Education Act, an added responsibility has been placed on the government to ensure that every child is guaranteed elementary education of a certain quality. Ensuring all the provisions of the Act carries with it a price tag. Is the State prepared to foot the bill for the RTE? 


So far, it does not seem to be the case. In fact, the budgetary implications for the RTE have yet to be worked out. With each budget falling short of requirements, it does not seem to be getting any closer to fulfilling the statutory requirements.


With the demand for education - even from the poorest of families - increasing every year, the need for increasing investment in this sector are growing. It is about time the government revised its priorities towards education, and allocated adequate funds to ensure not just universalisation, but access with quality as mandated in the Right to Education Act.

Kiran Bhatty

Kiran Bhatty is senior fellow at Centre for Policy Research. She has been working with Right To Education Act and National Commission for Protection of Child Rights.