The Budget allocation for the University Grants Commission (UGC), which provides funds and maintains standards in institutions of higher education, has been cut by almost 55 per cent, from Rs 9315.45 crore in 2015-16 to Rs 4286.94 crore in 2016-17.
Funding for the UGC has declined with the setting up of a Higher Education Financing Agency and increased focus on the Rashtriya Uchchatar Shiksha Abhiyan.
Rohin Kapoor, director, Deloitte in India, said the UGC's role as a funding agency would come down with the Higher Education Financing Agency being set up.
Finance Minister Arun Jaitley said in his Budget speech earlier this week that the Higher Education Financing Agency would be set up with an initial capital base of Rs 1,000 crore. The agency will leverage funds from the market and supplement them with donations.
Overall, the allocation for the department of higher education has climbed to Rs 28,840 crore from Rs 25,399 crore. This amount includes provisions for various technical institutions. A sum of Rs 190 crore has been earmarked for setting up of new Indian Institutes of Technology (IITs). Similarly, Rs 695 crore is available for Indian Institutes of Management (IIMs).
The previous budget had set aside Rs 300 crore for IIMs and Rs 1,000 crore for setting up new IITs and IIMs. No new IITs or IIMs were, however, announced this year.
Narayanan Ramaswamy, partner and head of education and skill development, KPMG in India, said there was a growing need for higher education institutions to reach the gross enrolment ratio target of 30 per cent by 2020 from 23.5 per cent now.
"No new IITs or IIMs were announced in this year's budget, which was a big change from last year. This could be due to the fact that many of the announced institutions are yet to commence operations," he added.
The Budget has also provided a fillip to skill development with an outlay of Rs 1,804.28 crore for 2016-17. S Ramadorai, chairman, National Skill Development Agency and National Skill Development Corporation, said the setting up of 1,500 multi-skill training institutes was a good initiative.