Education Budget 2026: Strong superstructures, weak foundations

The Union Budget presented in Parliament last Sunday by the Finance Minister raised a central question: if now is not the time to move toward the long-stated target of allocating 6% of GDP to education, then when? The overall budget for education and higher education compared to the revised estimate shows 8.4% growth, but falls short of meeting the 6% GDP target. If inflation and the need for expansion to implement the National Education Policy is taken into consideration, the budget is barely being maintained.

The major elements of the education policy continue to guide budget allocations. In higher education, the focus remains on skill training to raise workforce productivity, research and innovation, the academia–industry interface, and internationalisation. There is a reorientation towards skilling with a big funding announcement on PM SETU, which received some ₹6,000 crores. A high-powered committee titled “Education to Employment to Enterprises” reflects the focus on bridging the education–employment gap.

This, however, is not new. Last year’s budget also announced internships with top companies and multiple skilling missions. ITI revival was discussed earlier as well. There is a heavy focus on allocations, but if previous funds are not utilised, it becomes difficult to question why allocations are not increased. Rather than repeatedly announcing new schemes, the government must examine why implementation is failing. Education funding must be tied to outcomes, without that, neither allocation increases nor policy announcements will translate into impact.

The need for skilling emerges from a mismatch: unemployed youth on one hand and industry claiming it cannot find employable workers on the other. This gap between demand and supply has existed for a long time. A study showed that even candidates from skill development centres struggle with basic operational tasks in factories. This raises concerns about quality. However, skill-building alone prepares people for jobs, but higher education also has a responsibility to develop deeper cognitive abilities such as reflection, synthesis, and critical thinking. We must not discard these in pursuit of employability alone.

Other than skilling, some areas stand out. Funding for Institutions of Eminence had seen a drastic cut last year, creating the impression that selective funding for globally competitive universities was being abandoned. However, the revised estimate rose from ₹475 crore to ₹900 crore, and this level has been maintained, signalling that internationalisation is back on the agenda.

Academic–industry townships are proposed to bring institutions closer to industry so curricula can respond quickly to technological change, particularly AI. Innovation, and internationalisation is clear, but the base may be getting eroded. In a federal country, declining allocations to states could compromise higher education funding and accentuate disparities. Innovation is important, but foundational science and broad-based education must not be neglected. Education is critical for achieving Viksit Bharat, but more resources and stronger signals to states are needed to strengthen the foundation.

For instance, allied health professionals were discussed, with specific numbers mentioned: one lakh professionals, upgraded institutions, new caregiver institutions. Similarly, demand was identified for caregivers, veterinary professionals, and the AVGC sector. At least the demand-side identification has been done.

There is nearly a threefold increase in funding for Indian Knowledge Systems. Research and innovation funding has increased from ₹135 crore to ₹418 crore, particularly for technical and multidisciplinary education. PM-USHA, which supports state universities, saw underutilisation last year, but optimism is maintained with an allocation of around ₹1,850 crore. PM Research Fellowship funding has increased to ₹600 crore from about ₹290 crore last year. Grants for global engagement and institutions of excellence in humanities and social sciences are being maintained.

Allocation for digital e-learning has increased by 27% compared to the revised estimate. Digital e-learning is important because to raise the gross enrolment ratio to 50% by 2035 without commensurate increases in physical infrastructure spending, ICT and e-learning must reduce costs. This also supports student choice through the Academic Bank of Credits.