Budget 2026: Test of government’s priorities for underfunded education

Teacher shortages, digital gaps and poor infrastructure demand urgent public investment

With Union Budget 2026 on the horizon, India’s education system faces a pivotal moment, demanding substantial long-term public investment, structural reforms and focussed policies to deliver inclusive, high-quality learning.

As India prepares for Union Budget 2026, the education sector stands at a decisive moment. More than five years after the National Education Policy (NEP) 2020 promised a generational transformation universal access, multidisciplinary learning, digital integration and increased public spending the system continues to grapple with foundational challenges.

Enrolment gaps, uneven learning outcomes, teacher shortages, digital divides and infrastructure deficits remain persistent, even as India positions itself as a global knowledge economy. Budget 2026 is therefore being viewed not merely as a financial exercise, but as a litmus test of the government’s commitment to long-term human capital development.

Education has historically occupied a complex space in India’s fiscal priorities. While successive budgets have increased nominal allocations, public spending on education has consistently fallen short of the NEP’s target of 6 pc of GDP. Between 2015 and 2024, India’s education expenditure fluctuated between 4.1 and 4.6 pc of GDP, according to UNESCO data. In Budget 2025, the Centre allocated approximately INR 1.28 trillion to education, marking a 6–6.5 pc increase over the previous year. However, when adjusted for inflation, population growth, and rising operational costs, the marginal increase offered limited fiscal room for transformative change.

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The disconnect between ambition and allocation becomes sharper when seen against India’s demographic realities. The country has the world’s largest youth population, with more than 250 million students enrolled across schools and higher education institutions. At the same time, learning outcome surveys and administrative data continue to flag systemic weaknesses. According to UDISE+, an educational management information system 2024–25 report, India’s school teacher count is 10.12 million, yet significant structural challenges remain. Key findings indicate that 1,04,125 schools operate with a single teacher, while 5,149 government schools reported zero student enrolment. Nearly 57.8 pc of schools have less than 100 students, indicating a need for resource rationalisation

These figures point to structural inefficiencies in school mapping, teacher deployment and local governance issues that require sustained public investment rather than one-time schemes.

Teacher capacity is another area demanding urgent fiscal attention. While recruitment numbers have improved on paper, teacher training and professional development remain uneven across states. Continuous Professional Development (CPD), envisioned under NEP 2020, requires sustained funding for digital training platforms, academic mentorship, and curriculum transition support. In 2024 and 2025, several states reported difficulties in implementing new competency-based curricula due to limited teacher preparedness. Without dedicated budgetary support for large-scale training and evaluation mechanisms, curricular reform risks remaining superficial.

Higher education presents a parallel set of challenges. India’s Gross Enrolment Ratio (GER) in higher education was 28.4 pc in 2021-22, with the NEP 2020 aiming to increase this to 50 pc by 2035. Achieving this 50 pc target requires adding approximately 33 million to 35 million new seats, nearly doubling the current capacity to 86.11 million by 2035. Achieving this expansion requires not only new institutions but also investment in faculty recruitment, research infrastructure, student housing, and digital access. While Budget 2025 announced incremental expansion of top institutes like the Indian Institutes of Technology (IITs), Indian Institutes of Management (IIMs) and central universities, public universities and state-funded colleges where the majority of students are enrolled continue to face chronic underfunding. Faculty vacancies, outdated laboratories, and limited research grants have constrained India’s global academic competitiveness.

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Research and innovation funding remains another critical gap. India’s expenditure on research and development has hovered around 0.65 pc of GDP, significantly lower than that of advanced economies and even several emerging peers. According to the World Bank, while European Union spends about 2.4 pc on R&D, China is close to 2.7 pc and the United States leads with over 3.6 pc, putting the Indian funding close to amongst the lowest in global emerging economies.

While Budget 2025 announced a INR 5 billion allocation for an AI Centre of Excellence in education, stakeholders says that isolated initiatives cannot compensate for the absence of a robust, long-term research financing ecosystem. Budget 2026 is expected to be scrutinised for whether it moves beyond pilot projects towards institutionalising research funding across universities and interdisciplinary centres.

Academics argue that Budget 2026 must move beyond incremental allocations and address deeper structural reforms within the education system. Emphasising the need for sustained public investment across research, infrastructure and teacher development, Rahul Kapoor, Assistant Professor, Department of Social Work, Gautam Buddha University, underscores the broader implications of budgetary choices.

“The education sector needs to be strengthened through a robust research ecosystem and increasing budgetary allocation for research and skill development is of prime importance. Equally critical is sustained investment in the academic growth and professional acumen of teachers, both at the school level and in higher education,” Kapoor tells Media India Group.

The concern is reflected in official data. Despite years of capital expenditure, a large number of government schools continue to operate without basic facilities. According to a report by UN 2024-25  less than 60 pc of schools in India are fully accessible to children with special needs (CWSN), with only 54.9 pc having ramps and 35.6 pc featuring CWSN-specific toilets. Despite improvements in infrastructure, with 79 pc of schools having ramps, only 55 pc of those include necessary handrails. Significant barriers remain, including a lack of specialised teachers, training, and accessible learning materials, preventing full inclusion. Kapoor says that strengthening school infrastructure must be seen as a shared national responsibility aimed at reducing inequalities and advancing equity and inclusion.

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“Infrastructure improvement needs immediate and enhanced budget allocation to encourage a strong system of public education capable of fighting glaring inequalities and promoting equity and inclusion,” he adds.

Kapoor continue to stress that fiscal priorities must go beyond incremental spending and focus on correcting long-standing structural gaps.

Digital education, which expanded rapidly during and after the pandemic, now faces the challenge of equity and sustainability. Despite the rollout of national platforms, access to digital learning remains uneven across regions and socio-economic groups. Government data from 2024 points to persistent gaps in internet connectivity, device availability, and digital infrastructure, particularly in rural and remote areas, limiting students’ ability to benefit from online and blended learning models. Emphasising these disparities, Kapoor says digital learning is another emerging area that needs urgent attention from the government to ensure that education reaches even the remotest areas of the country. Without sustained public investment in last-mile connectivity, teacher training, and localised digital content, experts warn that technology-driven education could reinforce existing inequalities rather than bridge them.

Early childhood education and foundational learning are also emerging as budget priorities. The National Initiative for Proficiency in Reading with Understanding and Numeracy (NIPUN Bharat) has highlighted learning deficits at early grades, exacerbated by pandemic disruptions. Data from 2024 suggests that a significant proportion of students in Grades 3 and 5 struggle with age-appropriate reading and arithmetic. Strengthening anganwadis or day care centres, pre-primary schooling, and early-grade teacher training requires coordinated funding across ministries a complexity that Budget 2026 will need to address with clarity and convergence.

Another pressing issue is education financing at the state level. Education is a concurrent subject, and states bear a significant share of operational costs. However, fiscal stress and uneven revenue capacity have limited many states’ ability to match central schemes. In 2025, several states flagged delays in fund disbursement and challenges in meeting matching grant requirements. A more flexible funding architecture, with outcome-linked transfers and capacity-building support, is increasingly being discussed as part of Budget 2026 deliberations.

Educationists underline the central role of sustained public investment in addressing long-standing structural weaknesses.

“Public investment in education cannot be treated as discretionary or residual expenditure; it is foundational to nation-building. India’s demographic advantage will only translate into economic growth if the State commits to sustained investment across the entire education continuum from early childhood care and school education to higher education, research, and skill development. Incremental or scheme-based funding is insufficient to correct deep-rooted challenges such as regional disparities, quality gaps and employability deficits. A long-term and predictable public financing framework is essential to ensure that education remains accessible, inclusive, and aligned with the country’s broader development and productivity goals,” Rajeev Kumar, Educationist, tells Media India Group.

Private sector participation is also part of the policy conversation, particularly in skilling, edtech, and higher education infrastructure. While public-private partnerships can supplement government resources, the sector has faced volatility since 2023 due to funding slowdowns and regulatory uncertainty. Budget 2026 is expected to clarify the government’s approach towards regulating and supporting private investment in education, especially in emerging areas such as online degrees, micro-credentials, and industry-linked skilling programmes.

As the budget approaches, the central question remains whether education will finally be treated as core economic infrastructure rather than a social sector obligation. Incremental increases may sustain existing schemes, but they are unlikely to deliver the systemic transformation envisioned under NEP 2020. What the sector increasingly seeks is predictability in funding, long-term planning, and a clear roadmap to reach the 6 pc of GDP target.

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Expanding the Right to Education, experts highlight that beyond funding, policy evolution is critical to long-term human capital development. Specifically, the Right to Education (RTE) Act, which currently mandates free and compulsory education for children aged 6 to 14, should be expanded to cover schooling up to Class XII.

“The one policy which needs to evolve is the Right to Education Act. The Act currently mandates free and compulsory education for children between 6 to 14 years, mainly focusing on primary and secondary education. The gambit of the Act should increase and cover free and compulsory schooling of children till Class XII. This change will obviously require more government budget allocation for the education sector, but at the same time, it will also give the country a decent educated, skilled, and employable youth force,” says Kapoor.

None of the issues raised by the experts and educationists are new to the government, but successive budgets have failed Indian youth, creating a bubble of demographic disaster as the country becomes home to the world’s largest pool of young, but unskilled and poorly educated people, who are already struggling to find jobs matching their on-paper qualifications.