The Narendra Modi government has just won a huge mandate from the people – for many an unexpected win given the poor state of the economy, the high unemployment rate, agricultural distress and falling growth rates. In reposing their faith, the people have given this government a second chance to fix these problems and deliver tangible results. Expectations are high for them to act decisively and find solutions.
Big bang announcements were thus on the cards for this Budget. The need to boost private investment and improve growth prospects loomed large on the agenda. The private sector also made its position very clear – demanding incentives in the form of a reduction in corporate tax rates, labour reforms and improvement in infrastructure that would reduce their costs of production.
Unsurprisingly therefore, corporate taxes have been reduced. The 25% tax bracket for all private companies with annual turnover of Rs 400 crore (up from the Rs 250 crore earlier) will cover 99.3% of all companies.
Labour reforms have also been alluded to through the simplification of all labour laws into a set of four codes. What they will include is yet to be known – but if it will be geared towards private enterprise is not unknown.
The surprise elements, however, are in the topic of infrastructure development, especially on the raising of funds through foreign bonds, thereby breaking a cardinal rule of governments thus far.
In fact, the subject of raising of funds for social infrastructure also saw a radical shift with the announcement of a social stock exchange that would enable the raising of private funds for social sector projects. What would these include? Would basic education and health fall in this category too? Details are still awaited, but one can hope that that is precisely the intention.
Who will spend on education?
To look at education specifically, public spending on it has always been far below what was desired. In absolute terms, it has inched upwards every year but it has never matched the accelerating demand and its share has remained far below the 6% of GDP suggested by the Kothari Commission in as early as 1965.
While previous governments have been as much to blame, the Bharatiya Janata Party government had hit a new low with an allocation that amounted to 2.6% of GDP last year – the lowest in decades.
In fact, the shift away from the public in provisioning of social services has been steadily increasing since 2014-15. Appeals to the private sector to step in and boost the efforts of the state in education through the introduction of technology, provision of books, designing evaluations, public private partnerships in management, provision of mid-day meals, have all been on the rise.
Further, the private has increasingly been seen as a measure of the public, neglecting the larger public role of education.
In this context, it was refreshing to see the draft National Education Policy (NEP) making a strong case for public investment in education, including school education. In fact, its recommendations cover a vast range of reforms that would require a huge increase in public spending – incrementally, but also as one-time additions.
The draft also includes in its suggestions several sources of private funding, such as Corporate Social Responsibility and individual philanthropy. The idea of a social stock exchange appears to be in line with this growing idea of leveraging private funds for social efforts.
However, it ignores the fact that thus far such sources have amounted to a minuscule portion of the total expenditure on education and it is hard to see them increase significantly in future either.
The demand for spending on education has been increasing at an exponential rate and requires huge resources – a requirement that has consistently been ignored. Turning to private funding now is not likely to provide a solution.
A subject glossed over
Unfortunately, education was barely alluded to in the Budget, barring the mention of a National Research Fund to facilitate cutting edge research by higher educational institutes – one of the suggestions made in the draft NEP.
And the youth were mentioned in the context of providing them skills that would enable them to get jobs abroad, such as in foreign languages and artificial intelligence. Given all the challenges facing young people, including acquiring basic educational skills, mentioning just this point does come across as rather odd.
There was not even a murmur on school education in the speech. So one has to rely on the budget documents to get a sense of what the government has in mind for this year. What that says is that the allocation for National Education Mission, that covers Samagra Shiksha Abhiyan, has increased from Rs 34,000 crore last year (including the supplementary budgetary allocations) to Rs 38,547 crore this year, clearly with no reference to the suggestions in the NEP.
One can only hope that there would be supplementary budget provisions later that reflect the finalised policy, even in small measure.
A reminder to those behind the NEP
From the manner in which public private partnerships and private funding is being prioritised, the government is clearly not planning on any course corrections in the manner in which it views provisions for education.
Those behind drafting the NEP have just shifted the deadline for submissions on the Ministry of Human Resource Development website to the end of July. They would do well to take into account the paucity of resources from the treasury as they finalise the policy after taking recommendations.
Otherwise, instead of referring to the 1965 Kothari Commission’s advise for a 6% of GDP share for education, we will now be referring to the Kasturirangan Committee’s recommendations for the exactly same.
The new policy comes after a long gap of more than three decades. It recognises correctly the critical juncture at which the sector is poised and the need to invest in it. But all its good intentions and recommendations are likely to come to naught if the finance ministry does not find a way of opening its purse strings.
In the era of radical shifts, this one is long awaited and much needed.
Kiran Bhatty is a senior fellow at the Centre for Policy Research, New Delhi and a founder member of the Forum for Deliberation on Education.