📋 The Original Ask: Top 10 Expectations from Budget 2025 (Published January 2025)
Before we score the government's delivery, here's a reminder of what the education sector asked for:
- Increase Education Outlay to 6% of GDP — Align with NEP 2020 and global benchmarks
- Deregulation & Ease of Doing Business — Single-window clearances, enable for-profit institutions
- Massive Infrastructure Push — Smart classrooms, STEM labs, eco-friendly campuses
- Residential Sports Schools — Build Olympic excellence through dedicated sports academies
- Make India a Global Higher Education Hub — Attract foreign universities and international students
- Invest in AI and Digital Education — AI-powered governance, multilingual EdTech, digital inclusion
- Skill Development & Job Creation — Gig economy skilling, green initiatives, faculty development
- Early Childhood Education Investments — Foundational literacy, infrastructure, health-nutrition integration
- Promote Public-Private Partnerships — Innovation hubs, teacher training, resource sharing
- Education Loan Reforms — Interest-free loans, loan forgiveness for public service
🎯 The Unified Argument Across This Series
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.
The Methodology: How We Scored
Each of the 10 expectations was evaluated on a three-tier scale based on tangible budget actions, not ministerial statements or press releases.
(Score: 1.0)
(Score: 0.5)
(Score: 0.0)
The final weighted score of 5.5/10 reflects a sector that received meaningful progress on several fronts but still missed key structural reforms. Let's examine each expectation.
The Detailed Verdict: 10 Expectations Examined
Increase Education Outlay to 6% of GDP
Not AddressedWhat We Asked: Fulfill the long-standing demand — echoed by the Kothari Commission (1966) and NEP 2020 — to raise education expenditure to 6% of GDP. We proposed specific allocations for infrastructure, teacher training, quality assurance, and equitable access.
What We Got: Combined education spending remains at approximately 2.9% of GDP (Centre + States, per Economic Survey 2022-23). The Ministry of Education's allocation grew nominally by 6.5% to ₹1.28 lakh crore (Note: Part II of this series uses the aggregate figure of ₹1.95L Cr, which includes MoE + Skill Development + Research + ECCE via WCD). As a percentage of total budget outlay, education's share declined from 3.2% to 3.1%. The 6% target remains aspirational with no roadmap or timeline announced.
Score: 0.0 — This is the foundational ask. Without adequate funding, all other reforms remain constrained. However, context matters: the 6% target is a multi-decade aspiration first articulated in 1966. The actionable gap for Budget 2026-27 is not just "more money" but better utilization of existing infrastructure. Private Capex has fallen to 10% of GDP (down from 16.8% in FY08); manufacturing capacity utilization is stuck at 75%. The infrastructure is waiting for the economy to catch up.
Deregulation and Ease of Doing Business
PartialWhat We Asked: Single-window clearance for institutions, permit for-profit entities to enter education, simplify compliance for MSMEs, decentralize regulatory bodies (UGC/AICTE), and encourage EdTech innovation with tax breaks.
What We Got: The Higher Education Commission of India (HECI) Bill remains pending. Some state-level single-window systems have emerged, but no central mandate. The for-profit question remains untouched — education continues to operate under the "not-for-profit" fiction. EdTech received no specific tax incentives, though the AI Mission indirectly supports digital learning startups.
Score: 0.5 — Incremental administrative reforms, but the structural barriers (for-profit ban, regulatory fragmentation) persist.
Massive Infrastructure Push
DeliveredWhat We Asked: Expand urban infrastructure (metros, smart cities) with dedicated education zones, enhance digital classrooms and STEM labs, invest in examination infrastructure, and promote green/sustainable buildings.
What We Got: This is the one area where the government delivered decisively. The PM-USHA scheme received a 47% boost. Capital expenditure on IITs, IIMs, and central universities increased by 23%. The ₹1 lakh crore R&D Infrastructure fund (over 5 years) includes provisions for upgrading labs. Digital infrastructure under PM e-VIDYA expanded to 200+ channels.
Score: 1.0 — Phase 1 Complete. The hardware has been delivered—PM-SHRI Schools, IIT expansion, Atal Tinkering Labs, digital classrooms. But hardware without software is underutilized. Budget 2026-27 must now pivot from construction to capability building inside these facilities. (See Part III of this series for the strategic pivot required.)
Promoting Residential Sports Schools for Olympic Excellence
PartialWhat We Asked: World-class residential sports schools, talent identification programs in rural/tribal areas, partnerships with global sports institutions, scholarships for athletes, and integrated sports-academics curriculum.
What We Got: Khelo India budget increased by 12% to ₹1,650 crore. The scheme now covers 30 Khelo India Centres of Excellence. However, the residential sports school model at scale (comparable to China's or Russia's systems) has not materialized. Sports still sits awkwardly between the Education Ministry and Sports Ministry with no unified vision.
Score: 0.5 — Good intent, inadequate scale. India's 6 medals at Paris 2024 won't become 26 without systemic investment.
Making India a Destination for Higher Education & Attracting Foreign Universities
DeliveredWhat We Asked: Aggressive marketing of Indian institutions abroad, simplified regulations for foreign university campuses, tax incentives and land subsidies for education hubs, comprehensive support infrastructure for international students, and mentorship programs with global top-ranked institutions.
What We Got: A landmark year for internationalization. Three foreign universities are now operational: University of Southampton (Gurugram, July 2025), Deakin University (GIFT City, 2024), and University of Wollongong. 15+ universities have received UGC Letters of Intent, including University of Liverpool (Bengaluru), Queen's Belfast, Illinois Tech (Mumbai), and Western Sydney (Greater Noida) — all set to open by 2026-27. The International Education City in Navi Mumbai is progressing. This is a structural shift.
Score: 1.0 — From zero to 15+ approved campuses in 18 months. The policy unlock is real. Execution at scale must follow.
Investments in Artificial Intelligence (AI) and Digital Education
DeliveredWhat We Asked: AI research funding, digital infrastructure in rural schools, national repository of AI-enabled resources, multilingual learning tools, AI-powered education governance, and cybersecurity for digital education.
What We Got: The India AI Mission received ₹10,300 crore (over 5 years) — the single largest AI investment in Indian history. This includes establishing AI Centres of Excellence in education. The Digital University is progressing. SWAYAM 2.0 with AI-based personalization launched. DIKSHA platform reached 156 crore+ content plays.
Score: 1.0 — Input Delivered, Output Pending. AI applications in education were prioritized—India AI Mission (₹10,300 Cr), SWAYAM 2.0, Centre of Excellence for AI in Education. But funding AI tools is not the same as building AI sovereignty. We bought the software; we haven't trained the workforce to build it. The deeper question of 'Deep Tech Sovereignty' (indigenous LLMs, sovereign compute) remains unaddressed—a strategic gap Part III of this series examines.
Skill Development, Job Creation, and Faculty Development
PartialWhat We Asked: Increased funding for skilling in AI, robotics, and green tech; industry-academia partnerships; rural skilling hubs; incentives for hiring underrepresented groups; competitive salaries for faculty; and faculty exchange programs.
What We Got: The PM Internship Scheme announced 1 crore internships over 5 years. Skill India Digital Hub launched. However, faculty development remains critically underfunded — no new National Faculty Development Programme. Faculty vacancies in central universities remain at 35-40%. The "skilling" numbers remain impressive on paper but employment outcomes are opaque.
Score: 0.5 — Skilling gets headlines; faculty development gets neglected. This is a long-term crisis masked by short-term programs.
Investments in Early Childhood Education (ECCE)
PartialWhat We Asked: Increased funding for foundational literacy and numeracy (FLN), capacity building for Anganwadi workers, equitable access in rural/tribal areas, integration with health and nutrition programs, and modern infrastructure for early education centers.
What We Got: Meaningful but insufficient progress. The National ECCE Curriculum 2024 was launched for ages 3-6 years, with structured weekly calendars and assessment tools. NIPUN Bharat Mission continues with ₹2,500 crore allocation. State-level ECCE budgets increased 46% (₹900 cr to ₹1,300 cr between 2022-25). The "Poshan Bhi Padhai Bhi" program strengthens Anganwadi education components. However, ECCE still lacks a dedicated budget line under MoE.
Score: 0.5 — Progress on curriculum and state funding, but the structural integration with school education (as envisioned in NEP 2020) remains incomplete.
Promoting Public-Private Partnerships (PPPs) in Education
Not AddressedWhat We Asked: Incentives for private investment in underserved areas, PPP-driven innovation hubs, shared operations models, teacher training partnerships, infrastructure sharing frameworks, performance-linked incentives, and CSR channeling into education.
What We Got: No PPP framework for education was announced. CSR rules remain unchanged with no specific carve-out for education infrastructure. The ideological discomfort with "private" in "public education" continues to block pragmatic solutions. Meanwhile, 45% of Indian children attend private schools — a reality the policy apparatus refuses to engage with.
Score: 0.0 — The public vs. private binary is a 20th-century debate. The Budget offers no 21st-century synthesis.
Education Loan Reforms and Debt Relief for Students
PartialWhat We Asked: Interest-free or low-interest loans for priority fields, grace period for repayment, loan forgiveness for public service, national student debt portal, government-backed guarantee scheme, and digital literacy for financial management.
What We Got: PM Vidyalaxmi scheme is now operational with collateral-free loans up to ₹10 lakh and 3% interest subvention for families earning up to ₹8 lakh. Budget 2025-26 introduced 0% TCS on overseas education loan remittances — a significant relief for students going abroad. TCS exemption threshold raised from ₹7 lakh to ₹10 lakh. CSIS scheme continues interest subsidy during moratorium. However, loan forgiveness for public service and comprehensive debt relief remain unaddressed.
Score: 0.5 — Real progress on access and tax relief, but the deeper structural reforms (forgiveness, income-based repayment) are still missing.
The Structural Blind Spots: Five Reforms Budget 2025-26 Ignored
Beyond the 10 explicit expectations, there are five structural interventions that would fundamentally transform India's education financing and delivery. These are not incremental asks — they are architectural changes that no Budget has seriously considered. We present them here as an urgent agenda for the upcoming Budget 2026-27.
Structural Reform #1: "PLI for Pedagogy" — Outcome-Linked Incentives for Institutions
The Concept: Just as the Production-Linked Incentive (PLI) scheme transformed Indian manufacturing (₹1.97 lakh crore in incentives driving ₹4 lakh crore+ in production), education needs a parallel framework. "Placement-Linked Incentives" would provide tax rebates or grants to institutions that achieve verifiable high-wage employability outcomes.
Why It Matters: India produces 15 lakh+ engineering graduates annually; less than 20% are "employable" by industry standards. The current system rewards enrollment, not outcomes. PLI for Pedagogy would flip this — rewarding institutions that produce job-ready graduates with measurable placements above minimum thresholds.
Budget Status: Not even discussed. The ideological resistance to "outcome-based funding" in education persists.
Structural Reform #2: Hybrid Annuity Model (HAM) for School Infrastructure
The Concept: The Hybrid Annuity Model revolutionized highway construction (NHAI's ₹3+ lakh crore portfolio). Apply it to schools: government shares risk via guaranteed student vouchers while private players build and operate high-quality schools in rural/underserved areas. The government pays 40% upfront, 60% over 15 years linked to enrollment and learning outcomes.
Why It Matters: India needs 2 lakh+ new schools to meet NEP 2020's access targets. Government capital expenditure alone cannot bridge this gap. HAM would mobilize private capital while ensuring accountability through outcome-linked annuity payments.
Budget Status: Zero mention. School infrastructure remains entirely within government capex paradigm.
Structural Reform #3: Dedicated "Compliance Capacity Fund" for Accreditation
The Concept: NAAC, NIRF, AISHE, and multiple regulatory frameworks impose significant compliance costs on institutions. If the State demands higher standards, it must fund the transition. A dedicated ₹5,000 crore Compliance Fund would provide grants to institutions (especially Tier-2/3 colleges) for quality upgrades, data systems, and accreditation preparation.
Why It Matters: Currently, institutions divert tuition fees to consultants for accreditation compliance. This is a regressive tax on students. The Fund would democratize access to quality assurance, preventing a two-tier system where only well-resourced institutions can achieve accreditation.
Budget Status: Invisible. Ranking pressure is increasing; support for meeting it is absent.
Structural Reform #4: District Innovation Sandboxes with Lab-to-Land Bridge Fund
The Concept: The ₹1 lakh crore R&D fund announced in the Budget is welcome but will likely flow to IITs and IISc. To democratize innovation, establish "District Innovation Sandboxes" attached to Tier-2/3 engineering colleges. A "Lab-to-Land Bridge Fund" (₹50 lakh grants) for student-faculty teams would translate research into local solutions.
Why It Matters: India's innovation output is concentrated in 20 institutions. The other 3,000+ engineering colleges produce negligible patents. Sandboxes would decentralize R&D, create local employment, and connect research to district-level problems (agriculture, water, healthcare).
Budget Status: Macro provision exists; micro architecture missing. The R&D fund has no explicit Tier-2/3 allocation formula.
Structural Reform #5: GST Rationalization on Education Ancillary Services
The Concept: While core education is GST-exempt, ancillary services face 18% GST — EdTech platforms, testing services, educational software, coaching, hostel accommodation (above thresholds). Rationalizing this to 5% would reduce the real cost of education for middle-class families.
Why It Matters: A student using an EdTech platform for JEE preparation pays 18% GST embedded in the subscription. Parents paying for school transportation, uniforms, and technology face cascading taxes. The "indirect tax" burden on education is invisible but substantial — estimated at ₹15,000-25,000 per student annually.
Budget Status: Not addressed. The Budget focused on direct allocations; the indirect tax architecture remains unchanged.
The Road Ahead: What Must Change in Budget 2026-27 (Due February 1, 2026)
Viksit Bharat
Spend (% GDP)
Students Abroad (ISMR 2025)
Private Schools
The numbers tell a story of missed opportunities. With 21 years to achieve "Viksit Bharat" (Developed India by 2047), we cannot afford another decade of incremental budgets. The education sector's expectations are not wish lists — they are prerequisites for a $10 trillion economy.
The Core Message: Budget 2025-26 delivered on hardware (infrastructure, AI systems) but failed on software (financing models, regulatory reform, human capital). You cannot build a knowledge economy by constructing buildings alone. The upcoming Budget 2026-27 — due in just 7 days — must address the 5 structural reforms or risk another year of underperformance.
The sector asked for 10 things. It got 3 fully, 5 partially. Score: 5.5/10. Progress, but with foundational gaps remaining.
Our 10-Point Agenda for Budget 2026-27
With Budget 2026-27 just days away, we present an updated agenda. Eight items are carry-forwards — expectations that remain unmet or partially addressed. Two are elevated priorities — structural reforms we believe can transform the sector if implemented.
What's Different This Year?
Retired from the list: "Massive Infrastructure Push" and "AI & Digital Education" — both delivered in Budget 2025-26.
Elevated to the list: PLI for Pedagogy and HAM for Schools — structural reforms that can multiply the impact of existing investments. These aren't incremental asks; they're architectural changes that could transform how education is financed and delivered in India.
The Question for Policymakers — With 7 Days to Go
In January 2025, we published our expectations. Budget 2025-26 delivered a score of 5.5/10. On February 1, 2026, Hon'ble Finance Minister Nirmala Sitharaman Ji will present Budget 2026-27.
The education sector is asking for investment — in human capital, in future competitiveness, in the only resource India has in abundance: its people.
Will Budget 2026-27 finally deliver?
Need Help Navigating the Policy Landscape?
RAYSolute helps institutions translate budget announcements into strategic action — from NIRF optimization to NEP compliance to accreditation readiness.
Schedule a Consultation