India's Education Budget 2015-2026: A Tale of Progress, Paradox, and Promise
Aurobindo Saxena
January 2026
10 min read
As the Union Budget 2026-27 approaches, it is time to move beyond the annual ritual of celebrating "record allocations" and instead examine what eleven years of budget data actually reveal. The story is neither one of unqualified success nor abject failure—it is a tale of genuine progress in some areas, troubling paradoxes in others, and unfulfilled promise where it matters most.
We have successfully built the Hardware of the economy — PM-SHRI Schools, IIT expansion, AI Mission, foreign university campuses, Dedicated Freight Corridors. The physical and digital backbone is delivered.
The challenge for 2026-2030 is to install the Software — human capital deepening, regulatory reforms, consumption stimulus, and outcome accountability — to activate these assets. The contradiction you may perceive between "delivered" and "gaps" is not factual error; it is the natural friction of an economy transitioning from Infrastructure-Deficit to Infrastructure-Surplus state. The agenda is now: Utilization, Up-skilling, and Unlocking Consumption.
India's combined education and skilling budget has grown from ₹96,858 crore in 2015-16 to ₹1,95,324 crore in 2025-26—an impressive 102% increase in nominal terms. (Note: This aggregate figure includes five budget heads: School Education and Higher Education from the Ministry of Education; Skill Development from MSDE; Research & Innovation from DST/DBT; and ECCE via the Women & Child Development Ministry's Saksham Anganwadi scheme.) Research & Innovation allocations surged 277%, skilling investments grew 352%, and flagship schemes like PM-SHRI Schools emerged to modernize school infrastructure.
Yet beneath these headline numbers lie structural concerns that demand attention: ECCE (Early Childhood Care and Education) has stagnated despite NEP 2020's foundational focus, education's share of the Union Budget has actually declined, and chronic underutilization means allocated funds often don't translate into ground-level impact.
+102%
Total Budget Growth (2015-2026)
+277%
R&I Sector Growth (Highest among all)
+352%
Skilling Growth (Small base, big leap)
+36%
ECCE Growth (Lowest despite NEP)
I. The Complete Picture: 11 Years of Budget Evolution
Before diving into specifics, let's visualize the complete trajectory. The chart below shows how each education and skilling sector evolved from 2015-16 to 2025-26, revealing both the sustained dominance of School Education and the dramatic R&I surge in the final year.
Exhibit 1: Union Budget Education & Skilling Allocations (2015-2026)
School Education dominates; R&I shows dramatic 2025-26 spike; ECCE flatlines throughout
Several patterns emerge from this overview. School Education maintains its dominant position but grows steadily. Higher Education follows a similar trajectory. The R&I line shows modest growth until 2025-26, when the ₹20,000 crore RDI scheme creates a dramatic spike. Most concerning is the ECCE line (dashed orange), which remains essentially flat throughout the decade despite NEP 2020's emphasis on foundational learning.
II. Decomposing the Growth: What ₹98,466 Crore of Growth Bought Us
Let's start with what went right. Between 2015-16 and 2025-26, India added ₹98,466 crore to its education and skilling budget. This wasn't mere inflation adjustment—it represented a genuine expansion of the education envelope.
The Wins Worth Acknowledging
Research & Innovation Revolution: The R&I sector emerged as the biggest success story, contributing 29% of total growth despite being only 11% of the 2015-16 base. The ₹1 lakh crore RDI scheme announced in Budget 2025-26 signals a paradigm shift—India is finally treating R&D as strategic infrastructure, not academic luxury. (Note: This R&D surge represents academic and applied research funding. 'Sovereign Deep Tech' capabilities—semiconductors, defense AI, indigenous foundation models—require a different funding architecture, as explored in Part III of this series.)
Skilling's Exponential Growth: The Ministry of Skill Development, created only in November 2014, saw its budget grow from ₹1,350 crore to ₹6,100 crore—a 352% increase. The new ITI Upgradation scheme (₹60,000 crore over five years) represents a mature recognition that we need fewer assembly-line workers and more technicians who can program, maintain, and command robot fleets.
Exhibit 2: How Each Sector Contributed to ₹98,466 Cr Growth
R&I contributed 29% of total growth—nearly triple its share of the 2015-16 base
III. The Paradox of Priorities: Why Share Matters More Than Size
Here's where the narrative becomes complicated. While absolute allocations grew impressively, education's share of the Union Budget actually declined from 3.5% in 2015-16 to 2.5% in 2025-26. The combined Centre-State education spend remains stuck at approximately 2.9% of GDP (per Economic Survey 2022-23)—far short of the NEP 2020 target of 6%.
Exhibit 3: How Sector Shares Shifted Over 11 Years
R&I gained +9.2 percentage points; ECCE lost -5.5 percentage points
The ECCE Paradox: NEP 2020 declared foundational literacy its top priority with the 5+3+3+4 structure. Yet ECCE's share of the total education and skilling budget declined from 16.7% to 11.2%. (Note: ECCE is primarily funded through Saksham Anganwadi under the Women & Child Development Ministry, not MoE. This analysis includes WCD's education-focused ECCE allocation, not nutrition/health components.) There is still no dedicated Ministry of Education budget line for pre-school education—a structural gap that no amount of policy rhetoric can bridge.
IV. The Efficiency Question: Where Did the Money Go?
A budget is only as good as its utilization. Here, the data reveals a troubling pattern: chronic underutilization plagues several critical schemes, with gaps of 15-40% between Budget Estimates and actual expenditure.
Scheme
Utilization Rate
Gap
Root Cause
Samagra Shiksha
85%
-15%
State capacity variations
PM POSHAN
88%
-12%
Supply chain logistics
PMKVY (Skilling)
72%
-28%
Certification backlogs
DST
61%
-39%
Project approval delays
RUSA/PM-USHA
48%
-52%
State matching constraints
ANRF
48%
-52%
New scheme, slow disbursement
Exhibit 4: Budget Utilization Gaps — BE vs Actual
Implementation capacity, not allocation, is the binding constraint for several schemes
The Implication: Before demanding more allocation, we must address why existing funds remain unspent. RUSA's 48% utilization rate (based on release of funds vs. Budget Estimates; actual ground spending may vary due to state matching fund delays and UC submission lags) means states are leaving higher education money on the table. The Budget should include a "Capacity Building Fund for Utilization" to help states and institutions spend what they're given.
V. India's R&D Paradox: Impressive Outputs, Structural Underperformance
Perhaps the most striking story in the budget data is India's R&D paradox. Patent grants surged 17x from 5,000 to 85,000. India's Global Innovation Index rank improved from 81st to 39th. Yet GERD (Gross Expenditure on R&D) as a percentage of GDP actually declined from 0.84% to 0.64%.
How is this possible? The answer lies in understanding the difference between efficiency gains and structural transformation.
Exhibit 5: The Divergence — GERD/GDP Declined While Patent Output Surged
The lines crossing around 2017 marks the structural divergence — outputs rose while investment intensity declined
The chart above reveals the disconnect clearly. Around 2017, the patent output line (green) begins its steep ascent while the GERD/GDP line (red) continues its decline. This is the heart of India's R&D paradox.
Exhibit 6: India's R&D Paradox — Outputs vs Structural Gaps
India achieved efficiency gains without scale transformation — the RDI scheme targets this gap
The R&I Success Model: What makes R&I different? Direct funding to capable institutions (IITs, IISc, CSIR labs), minimal state intermediation, and clear output metrics (patents, publications, citations). The lesson: when you fund competent institutions directly with accountability, results follow.
The 2025-26 RDI scheme (₹1 lakh crore over 5 years) represents the most significant attempt to bridge this gap. But ANRF's 52% utilization shortfall in its first year signals that capacity constraints remain the binding factor.
VI. The Growth-Outcome Gap: More Money, But Better Results?
The critical question isn't how much we spend—it's what we get for it. R&I shows remarkable efficiency: a 277% budget increase yielded 17x growth in patent grants (from 5,000 to 85,000) and improved India's Global Innovation Index rank from 81 to 39.
Exhibit 7: Budget Growth vs Outcome Improvement by Sector
R&I is the efficiency leader; ECCE shows lowest growth despite NEP priority
The R&I Success Model: What makes R&I different? Direct funding to capable institutions (IITs, IISc, CSIR labs), minimal state intermediation, and clear output metrics (patents, publications, citations). The lesson: when you fund competent institutions directly with accountability, results follow.
VII. The Structural Architecture: Where the Money Actually Sits
Understanding budget architecture reveals concentration risks. Samagra Shiksha alone commands 52% of the School Education budget. In ECCE, a single scheme (Saksham Anganwadi & POSHAN 2.0) represents 100% of allocation.
Exhibit 8: Scheme-Level Allocations Within Each Sector (2025-26)
School Ed has diverse schemes; ECCE shows 100% single-scheme concentration risk
VIII. The Policy Timeline: Reforms That Shaped Budget Architecture
Budget allocations respond to policy architecture. The 2018 Samagra Shiksha merger simplified school education fund flows. NEP 2020 set ambitious targets. And 2025-26's RDI scheme represents the most significant R&D policy shift in decades.
Major reforms shaped budget architecture; ECCE stagnation and utilization gaps remain challenges
IX. The Deep Tech Imperative: A Strategic Pivot That's Working
The 2025-26 budget's ₹20,000 crore RDI allocation deserves special recognition. For the first time, India is treating deep tech investment as a national security imperative.
Global Context
United States: The CHIPS & Science Act allocated $13 billion specifically for semiconductor workforce development—recognizing that a $10 billion fab is worthless without engineers to run it.
China: The "Double First-Class" initiative pours billions into strategic disciplines—quantum, aerospace, and AI—turning university labs into dual-use R&D engines.
India's Response: The RDI scheme, ANRF, and semiconductor education initiatives suggest India is finally joining this strategic competition.
X. The Dark Factory Warning: Why Cheap Labor Won't Save Us
While we celebrate skilling budget growth, we must confront an uncomfortable truth: the jobs we're training people for may not exist in 2035. China's "dark factories"—fully automated manufacturing plants—produce smartphones without human presence.
The Strategic Shift Required: India doesn't need more "hands" to assemble phones; we need "minds" to design, program, and command the robot fleets. The Budget should aggressively fund mechatronics, robotics maintenance, and AI-assisted manufacturing training.
XI. The Grassroots Innovation Opportunity
While chasing quantum computing and AI, we risk ignoring India's unique competitive advantage: frugal engineering. The world needs scalable, low-cost technology—automated harvesting for small farms, low-energy cold chains, water purification at scale.
Proposal: District Innovation Sandboxes
Attach innovation labs to Tier-2/3 engineering colleges. Create a "Lab-to-Land" Bridge Fund offering ₹50 lakh grants to student-faculty teams who can turn local prototypes into manufacturable products.
The Philosophy: Stop trying to be Silicon Valley. Become the global hub for "Hard Tech" that solves real problems at scale.
School Ed dominance persists; R&I surge in 2025-26 clearly visible; ECCE flatlined throughout
The Path Forward: Balanced Optimism
India's education budget story is not one of failure—it is one of progress without proportionality. We have grown allocations, launched strategic initiatives, and begun recognizing R&D as national security. These are genuine achievements.
But we have also allowed ECCE to stagnate, tolerated chronic underutilization, and let education's share of the budget decline. The NEP 2020 vision of 6% GDP spending remains a distant aspiration.
Budget 2026-27 must answer: Are we building the strategic capabilities required for 2047—or just keeping the existing system running a little longer?
Aurobindo Saxena
Founder & CEO, RAYSolute Consultants
Aurobindo has 23+ years of experience in India's education sector and is a Forbes India contributor with 70+ published articles and 15+ industry reports. He specializes in education strategy, policy analysis, NIRF rankings consulting, and institutional transformation.
A strategic critique examining why India's education budget priorities are misaligned with the deep tech sovereignty crisis, workforce automation, and the 2047 vision.
