India cuts higher education budget as focus turns to skills

The first budget of Narendra Modi’s third term as India’s prime minister has prioritised skills education, with traditional university funding taking a substantial cut. 

Finance minister Nirmala Sitharaman has unveiled spending plans focused on addressing the high unemployment levels plaguing the country, which are thought to have damaged the prime minister’s performance in recent elections.

The government has dedicated Rs1.48 trillion (approximately £13 billion) for education, employment and skills in a budget focused on getting India’s youth into work. 

This includes new internship schemes and investment in India’s Industrial Training Institutes (ITIs), which provide a form of post-secondary vocational education.

The government also announced changes to the student finance system, offering loans of up to Rs1 million at an annual interest rate of 3 per cent for students entering higher education. 

Currently, interest rates on student loans are typically around 11 per cent, so the new scheme will provide a subsidy.

“Indian students and their families are already facing a student debt burden as well as being entrapped with an alarming youth unemployment crisis,” said Narender Thakur, associate professor of economics at Delhi University. “There is a need to waive the burden on students and their families with higher education loans.”

Ramgopal Rao, former director of the Indian Institute of Technology (IIT) Delhi, described the decision to upgrade ITIs and to provide new student loans as “a significant and welcome move”. 

However, some are disappointed with the money allocated to universities. The Department of Higher Education has been given about Rs400 billion in 2024-25 for spending on universities, compared with the Rs520 billion allocated in 2023-24.

While more money has been allocated to central universities, the University Grants Commission, which distributes funding to other universities and colleges, has had its budget cut by 61 per cent. 

“More than 80 per cent of higher education belongs to state universities and colleges in India, thus the budget seems to be exclusionary,” said Aarti Srivastava, head of the department of higher and professional education at the National Institute of Educational Planning and Administration.

And although spending on IITs increased by 3.5 per cent, the growth remains below inflation levels. 

“I am disappointed with the budget as far as education and higher education are concerned,” said Furqan Qamar, professor in the Centre for Management Studies at Jamia Millia Islamia University. 

The government also announced measures to boost research and development, including committing to operationalising the Anusandhan National Research Foundation, a new central research grants body. Ms Sitharaman also promised “a mechanism for spurring private sector-driven research and innovation”, with an initial investment of Rs1 trillion.

Professor Rao welcomed the establishment of the research body but said “increased research funding in advanced research fields is still needed”.

“The budget could have allocated more resources towards academic research partnerships,” he continued. “The focus on agricultural research, biotechnology and life sciences reflects a commendable intent to boost innovation. Continuous efforts to boost R&D investment are crucial to meeting global standards.” 

In general, the budget aligned with the focus on skills education and research investment set out in the 2020 National Education Policy (NEP), said Jayant Krishna, a non-resident senior fellow at the Centre for Strategic and International Studies. “I think directionally it is in sync with the NEP, but the NEP expects the moon, so not everything could be addressed in one year's budget.”

helen.packer@timeshighereducation.com