There are many eyeballs on the Union Budget 2018-19 not just because it is the last full-term budget before the 2019 elections but it is also the first after GST rollout. The education sector is slated to get its much-needed boost with school education expected to get 14% hike compared to the last year’s budget. The publishing industry also has big expectations from the government this year, expecting some bold moves.
Focus on Infrastructure and Digitization
‘Digital India’ was Prime Minister Narendra Modi’s flagship programme launched in 2014 with a vision to transform India into a “digitally empowered society and knowledge economy”. It focuses on addressing the issues related to technology in the education sector.
Various MNCs have leveraged this to empower students in India, offer skill development programmes, and use technology to reach out to the teachers and youth across the country. For example, Microsoft partnered with 12 state governments to build ICT skills in 8 lakh government school teachers under Project Shiksha. Similarly, Project Saksham is helping bridge the digital gap in higher education institutes, impacting 71 universities by integrating technology into classroom to increase creativity, accelerate learning, and bolster collaboration.
However, the structural issues in India’s higher education system are the root cause behind the demand-supply gap in the skill market. Private institutes, which account for two-thirds of higher education in India provide the finest education in the country. However, there are huge barriers for these institutions at every level – entry, operations, and exit.
Restrictions exist on the entry of foreign universities, foreign collaboration, and foreign faculty. Though there is a 100% FDI in the education sector, the clause doesn’t come without riders. According to the FDI policy for the education sector, a foreign entity can invest 100% in India but as a not-for-profit organization. Furthermore, only section 25 companies with no foreign investment can invest in institutes. If the government provides relaxation for these bottlenecks, foreign institutes and companies will be more than willing to invest in exchange programmes, distance education, and faculty exchange programmes with the existing Indian institutes.
Tax Rebates for Education Loan
The benefit for eight financial years was introduced in 2006 when the cost of education was not high. However, today, an average four-year engineering course costs INR 8 - 9 lakhs and an average medical degree costs INR 12 – 14 lakhs. The current interest rates on education loans range from 10.5% to 13.5%. Therefore, an average borrower will most likely need more than eight years to repay the loan. The education sector, including students and parents, are also anticipating relaxation in education loan under Section 80C.
In March 2017, an amendment denied tax relief for higher education institutions; according to Assocham, this must be immediately withdrawn. Furthermore, the chamber has also highlighted that private universities and higher education institutions are facing serious financial challenges related to high capital requirement and non-availability of financial concessions.
Higher educational institutes and private companies need enough financial aid to build capacity and solve the tax burden to be able to provide quality education in India. The chamber has additionally suggested to increase the education cess to seek higher public expenditure on education across schools, universities, and advanced institutions.
Outlook for publishing sector in the coming years.
The government has already slated a higher budget for the education sector this year keeping in mind the concerns related to the growth of education sector. Therefore, it is anticipated that there will be necessary actions in place to provide a boost to the education sector as well as the publishing sector to improve the quality of education, increase the impact of technology, and provide necessary financial reliefs for private institutions. This will help in better foreign collaborations, better outside-in perspective, and a higher student and teacher impact in India.
The author is the managing director of Pearson India