Budget 2025: A critical moment for strengthening India’s education system
Rising education budget still insufficient to address gaps
Despite a consistent increase in budget allocations over the years, the Indian education system remains fraught with infrastructural gaps
With the 2025 Union Budget on the horizon, educators and experts are emphasising key challenges within the education sector, including infrastructure gaps, teacher shortages, and the urgent need for increased funding and reforms.

Despite a consistent increase in budget allocations over the years, the Indian education system remains fraught with infrastructural gaps
As India gears up for the Union Budget 2025, the education sector finds itself at a critical juncture. The upcoming budget is expected to provide further insights into the government’s priorities in addressing systemic challenges that continue to hinder the country’s progress in education. Despite a consistent increase in budget allocations over the years, the Indian education system remains fraught with infrastructural gaps, declining enrolments, and a lack of adequate investment in research and development.
Over the past few years, the education budget has seen a steady rise. The Ministry of Education’s budget increased from INR 932 billion in 2021-22 to INR 1128 billion in 2023-24, marking a 21.1 pc rise. While this increase appears significant, it remains insufficient when compared to the vast challenges confronting the education sector. India’s education sector ranks 32nd globally according to the US News & World Report.
In 1964, the Kothari Commission recommended increasing the education budget from 2.9 pc of GDP to 6 pc, but even after six decades, the country’s education expenditure has never exceeded 3.5 pc of GDP, even though the New Education Policy, enacted two years ago, reiterated the need for spending of 6 pc. Countries like China, Japan, and South Korea invested heavily in education during the 1960s, while India still awaits proper funding. Other developing nations such as China, Brazil, and Argentina spend 4.2 pc, 6.2 pc, and 5.5 pc of GDP on education, respectively. Even Cuba, a poorer country, spends around 12 pc. India, with an average age of 28, spends just 0.7 pc of GDP on research and development (R&D), well below the global average of 1.8 pc.
Declining enrolments
The latest UDISE Plus report for 2023-24 paints a worrying picture: school enrolment has also declined by 3.7 million students, from 251 million in 2022-23 to 248 million in 2023-24. The most alarming decline is at the secondary level, where enrolments have fallen by 1.7 million students, followed by a 700,000 decline at the primary level (Classes 2-5) and 300,000 at the middle school level (Classes 6-8).
This gap poses a significant challenge for the education sector, as ‘reducing school dropouts and ensuring universal access to education at all levels by 2030’ is a primary goal of the National Education Policy (NEP) 2020 and the Sustainable Development Goals (SDGs). According to the Ministry of Education’s data, only 57 pc of schools in the country have computers, and 53 pc have internet facilities. Additionally, 10 pc of schools are still without basic amenities such as electricity or separate toilets for boys and girls.
Under various articles of the Indian Constitution, every child between the ages of 6 and 14 has the fundamental right to free and compulsory education. However, education, which is on the Concurrent List, has rarely been a priority for either central or state governments.
Education is a sector where investment has far-reaching effects. When the workforce is more skilled, economic development accelerates, social problems decrease, and women’s safety improves.
According to World Bank in 2023, India’s average per capita income was USD 2,600. States with strong education systems, such as Kerala, Telangana, and Tamil Nadu, have per capita incomes of around USD 4,000, while states like Bihar and Uttar Pradesh, where education is lagging, have per capita incomes under USD 1,000. UNESCO and World Bank studies estimate that every dollar invested in primary education yields a return of 15–25 pc.
The need for education tax reforms
Hussain Dilshi, Assistant Professor at Babasaheb Bhimrao Ambedkar Bihar University, emphasises the need for urgent reforms in India’s education tax structure. With the rising cost of schooling and higher education, he argue that reducing or eliminating taxes on these essential services could significantly ease the financial burden on families.
“Making education more affordable, particularly for students from disadvantaged backgrounds, requires a reduction or elimination of GST on educational services and digital learning resources. Government support for such measures would help build a more equitable education system, ensuring broader access to high-quality learning materials. Additionally, with the education sector continuing to push for a 6 pc GDP allocation in line with the NEP’s goal of achieving a 50 pc Gross Enrollment Ratio (GER) in higher education by 2035, including vocational education, there is a growing need for stronger government-industry collaboration,’’ Dilshi tells Media India Group.
“Greater investments in skill-based training, internships, and tech-driven solutions are essential. Leveraging technology and online learning is key to expanding access to higher education and improving learning outcomes. However, many institutions still struggle with outdated infrastructure and insufficient technological resources. To equip students for a rapidly evolving job market, we must establish a clear policy roadmap that ensures teachers and students alike have the tools they need to succeed in this digital age,’’ Dilshi adds.
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) highlights the rapid rise in education costs across India and suggests reducing the Goods and Services Tax (GST) on educational services from 18 pc to either 5 pc or zero. It also recommends increasing fellowships for higher education, ensuring education loans are available at lower interest rates, and introducing a subsidy programme for skill-based courses in the upcoming budget. Additionally, expenditure on educational technology (Ed-Tech) should qualify for tax exemption under Section 80C.
ASSOCHAM also emphasises that merely designating institutions as ‘Institutes of Eminence’ is insufficient, substantial financial support is essential. Given the government’s limited capacity to fund all initiatives, corporate entities should be incentivized to direct their Corporate Social Responsibility (CSR) contributions toward education. Furthermore, the budget should include measures to enhance teacher training so that schools and colleges can evolve into dynamic learning environments.
To strengthen education financing, the Government of India introduced a 2 percent Education Cess in 2004, later replaced by a 4 pc Education and Health Cess under the Finance Bill 2019. Although not a permanent revenue source, this cess has accounted for 70 pc of total education spending since 2015. However, excessive reliance on cess funding is a concern, as it does not provide a sustainable financial framework for the education sector.

Hussain Dilshi
Dilshi stresses the critical need for improved educational infrastructure in India. He highlights that modernising classrooms, laboratories, and libraries is no longer optional but essential for effective learning.
“A strong education system requires modern infrastructure that fosters effective learning. Upgrading classrooms, laboratories, and libraries is no longer a luxury but a necessity. Additionally, we must address the urgent need for more schools in Tier II and III cities to reduce overcrowding and improve accessibility. However, infrastructure is not just about buildings; it also includes proper sanitation facilities, clean drinking water, and hygienic restrooms, which are essential for students’ health and well-being. Sports and physical education should also be prioritised by investing in playgrounds and sports amenities, ensuring that students receive a well-rounded education that supports both their academic and physical development,” he adds.
Between 2014 and 2018, the cost of primary education in India increased 30.7 pc, while graduate and postgraduate courses saw hikes of 5.8 pc and 13.19 pc respectively. The National Sample Survey Office report from 2020 revealed the average expenditure on education had nearly doubled over the previous decade. In rural areas, the annual cost per student rose from INR 5,856 in 2008 to INR 12,345 in 2018, while in urban areas, it surged from INR 12,000 to INR 28,000. The All India Survey on Higher Education 2020-21 report further shows tuition fees for engineering courses in private institutions have increased by over 50 pc in the last decade. Education inflation, which briefly dipped to 0.63 pc during the pandemic in April 2021, climbed to 4.12 pc a year later. Now, it hovers around 11-12 pc.
The rise is attributed to various factors, including infrastructure development, higher faculty salaries, and technological advancements. Statistics indicate a rising burden on people due to increasing tuition fees and declining government funding. State-level disparities exacerbate this issue, creating inequality and limiting access to education for disadvantaged groups.
Rani Patel, founder of Aarohan, a non governmental organisation which stands firmly for the right to education for all children, with a particular focus on reaching those in need of access to quality education. Through her organisation, Patel has observed firsthand the critical challenges that underprivileged children face in accessing education. She emphasises the need for systemic change to ensure that every child, regardless of their background, is given the opportunity to learn and thrive.
“Ensuring quality education for underprivileged children in India continues to be a major challenge, primarily due to factors like domestic violence, economic crises, and a lack of resources. Children from marginalised communities often face the dual struggle of shuttling between cities and their hometowns, which severely disrupts their education. As a result, attendance in government schools is notably low. Many of these children suffer from poor health conditions, lack of proper care, and inadequate nutrition, leading to further barriers to education. While the government has introduced schemes like Anganwadi for early childhood education, there are still significant gaps,” Patel tells Media India Group.
Patel emphasises that teachers and Anganwadi workers play an essential role in shaping a child’s early development.
“I believe that both teachers and Anganwadi workers play a crucial role in shaping a child’s development. However, the ongoing economic crisis and the neglect of basic needs like food and safety continue to undermine our efforts. The most urgent issue, in my view, is ensuring that every child has access to the necessary tools they need to learn, because without those resources, their education will always be incomplete,” she adds.

Rani Patel
Patel highlights the growing challenges of online education, particularly for families in rural areas who lack the necessary devices, such as smartphones, to access digital classes. This digital divide only deepens the disparities in education, making it even harder for marginalised children to keep up.
“With the rise in online education due to the pandemic, many families especially those in rural areas lack the necessary devices, like smartphones, to access these classes. This digital divide further exacerbates the challenges. Moreover, the government’s current spending on education, just 2 pc of the national budget falls short of what is needed to address these systemic issues. The upcoming budget must prioritize increasing funding for education, ensuring uniform quality across regions, and addressing the safety and well-being of children. There is a pressing need for a shift in priorities, as the existing allocation is not enough to meet the demands of the sector, especially for marginalised children who are already at a disadvantage,” Patel adds.
Teacher absenteeism remains a critical issue in India’s education sector, with a UNESCO study revealing that absenteeism rates stand at 25 pc, one of the highest globally. This significant absenteeism contributes to inefficiencies in the utilisation of allocated education funds, undermining the effectiveness of government spending. When teachers are absent, the funds allocated for salaries, infrastructure, and materials are not utilized to their full potential, negatively impacting students’ learning experiences. As the government prepares the 2025 education budget, addressing teacher absenteeism must be a priority. Ensuring that funds are not wasted on salaries for non-present teachers and that the resources allocated for education reach students and schools directly is crucial. The budget should include provisions for monitoring attendance, implementing stricter accountability measures, and offering incentives or penalties to ensure that teachers remain in the classroom and that public funds are used effectively.
Aby P Varghese, advocate at the Delhi High Court, advocates for stronger legal mechanisms to ensure the effective and transparent use of education funds.
“To ensure that funds allocated for education are utilised effectively and transparently at the ground level, it is essential to implement a transparent online system that tracks fund allocation, utilisation, and expenditure. Regular audits and inspections should be conducted to ensure compliance with financial norms and regulations. Additionally, employees handling the allocation of funds should undergo training and capacity-building programmes to improve fund management. Stringent penal provisions for misappropriation, misutilisation, or embezzlement of education funds must be enforced, and any instances of such misconduct should be addressed promptly. With the government’s push towards digital payment systems, these tools can further ensure transparent and trackable fund transfers, minimising the risk of corruption and ensuring the resources reach the intended beneficiaries,” Varghese tells Media India Group.
India’s education system is also grappling with a critical shortage of qualified educators, despite having over 110 million teachers. The gap is particularly pronounced in rural areas, where more than one million teacher vacancies remain unfilled, affecting the quality of education and the future prospects of millions of children. Several factors contribute to this shortage, including low pay, job insecurity, and inefficient recruitment processes. Teachers in rural regions often struggle with inadequate resources, lack of professional development opportunities, and the challenge of managing large, underprivileged classrooms with minimal support. The problem is further exacerbated by a growing demand for skilled educators, especially as India’s population continues to expand.
“We are the backbone of the education system, but the government must understand that without proper support, no amount of passion can change the outcome for our children,” Rakesh Singh, a teacher in a government school in Uttar Pradesh tells Media India Group.

Aby P Varghese
Varghese, emphasises the need for comprehensive reforms and increased investment in India’s education system.
“In my opinion, there should be enhanced funding for digital infrastructure, online courses, and teacher training to promote e-learning across the country. With the growing importance of technology, it is crucial to equip both students and teachers with the necessary tools. Initiatives should also focus on promoting industry-relevant skills, vocational training, and apprenticeships to enhance employability. Additionally, increased investment in preschool education, childcare infrastructure, and teacher training is essential to lay a strong foundation for young learners. We must also prioritise improving teacher quality, recruitment, and training processes to ensure a motivated and skilled teaching workforce. Exploring innovative financing models, such as public-private partnerships, would help support infrastructure development and improve access to quality education. Finally, guidelines for modernising school infrastructure nationwide should be introduced, ensuring that a large number of students benefit from an upgraded educational environment, boosting the education sector as a whole,” he adds.
As the education sector looks forward to the upcoming budget, one of the key expectations is enhancing the research and development infrastructure in private universities.
“In my opinion, a significant focus should be placed on improving research and development facilities within private universities. By encouraging collaboration between the government and private institutions through the Public-Private Partnership (PPP) model, we can develop infrastructure that will meet the increasing demand for higher education. Such collaborations are crucial for providing state-of-the-art facilities that support academic excellence, innovation, and research, ensuring that private universities can cater to the growing number of students while offering a world-class education,” Dilshi adds.
Educators are emphasising the need for key reforms to strengthen the workforce.
“With the upcoming budget, we are hoping for better pay, better recruitment policies, and most importantly, an investment in teacher training that will help us deliver quality education to every child, particularly in the rural areas where the need is most urgent,” Singh adds.