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| Education sector awaits budget goodies |
| Kalpana Pathak / Mumbai Feb 28, 2011, 00:07 IST |
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The higher education sector is pinning its hopes on a few big-ticket reforms in the Budget to be unveiled on Monday.
Sector players and analysts said along with a substantial increase in budgetary allocation for both primary and higher education, the Budget should propose tax exemptions on various fronts, incentives for entrepreneurs to set up higher education institutions and support creation of specialised institutions and universities for the masses, too.
“From a direct tax standpoint , donations/endowments made to recognised educational institutions are entitled to a 50 per cent deduction from the taxable income of donor. The Budget could positively impact this process by extending the benefit to an across the board 100 per cent deduction for contribution to recognised educational institutions,” said Amitabh Jhinghan, Partner, Transaction Advisory Services and National Sector Leader – Education, Ernst and Young.
According to Jhinghan, an increased budget allocation towards education could help in implementation of right to education (RTE) and achievement of the targeted gross enrollment ratio of 30 per cent by 2020.
The Indian higher education system is one of the largest in the world in terms of number of institutions and student enrolment. Higher education spends in India are currently estimated at Rs 46,200 crore and are projected to grow to nearly Rs 150,000 crore in the next decade. This would reflect an average growth rate of 12.8 per cent according to Ernst and Young. Sector analysts said the need of the hour is to provide either funding or incentives to start universities for the mass market.
“We need allocation for creation of specialised institutions and institutions that cater to the masses. An increased allocation would help better the industry and academic interactions. Budgeting needs to be done for upgrading curriculum through industry interaction,” says Narayan Ramaswamy, Executive Director, Educational service, KPMG.
Sector players however, said allocation alone will not impress them. Implementation is the key.
“There is no significant expectation from the Budget. In the past two years, we have seen a lot of media hype from the Ministry of Human Resource Development. We want to see some execution now. A lot of new projects-- Creation of Central universities, innovation universities and new IIITs have been talked about. We wish to see the government doing some ground work for the same now,” said H Chaturvedi, director, Birla Institute of Management and Technology.
Analysts are also expecting grant of income tax exemptions on faculty salaries and increase in the expense deduction on contributions on research and development spends at universities.
“There is an active speculation the scope of taxable services in the education sector will be expanded. The budget should consider the larger impact of human resource development, skill building and the recent inflationary trends,” adds Jhinghan.
It should also consider exempting organisations that render services to recognised educational institutions from the levy of service tax.
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