Education Sector Emerges as Key Stabilizer Ahead of Union Budget 2026
As India prepares for the Union Budget 2026 against a backdrop of global economic uncertainty, the education sector is increasingly viewed as a critical stabilizer—one that policymakers are looking to strengthen for sustainable long-term growth. With international education expenses rising, global mobility patterns shifting, and the National Education Policy (NEP) 2020 entering a crucial implementation phase, the education community believes the upcoming budget must prioritize home-grown capacity building. Enhanced funding, tax support, and skill development initiatives could help India's education system expand, adapt to economic changes, and better prepare students for future challenges.
Building Domestic Capacity as Global Mobility Slows
One of the most noticeable shifts in recent years has been the slowdown in Indian students pursuing education abroad. According to Dr. Prashant Bhalla, President of Manav Rachna Educational Institutions, this trend is already influencing how families and institutions plan for higher education. "In times of global economic uncertainty, the education sector is expected to work as an anchor supporting growth with innovation-led and indigenous solutions," Dr. Bhalla stated. He highlighted rupee depreciation and rising overseas education costs as key factors pushing students to consider domestic options more seriously.
With global mobility trends in 2025 showing a decline in outgoing students, Dr. Bhalla emphasized that Budget 2026 should focus on improving the overall capacity of higher education in India and enhancing the global benchmarking of Indian institutions. This would enable them to compete internationally while meeting domestic requirements effectively.
Sustaining Enrolment Growth Without Pricing Students Out
India's Gross Enrolment Ratio (GER) in higher education has risen from 23.7% to 28.4% in recent years—a significant achievement, but one that brings new pressures. As enrolments increase, institutions are grappling with infrastructure gaps, faculty shortages, and affordability concerns.
Dr. Bhalla stressed that increased funding for student hostels, digital infrastructure, and campus facilities will be crucial to sustaining this momentum. "Strengthening scholarship and financial aid mechanisms is equally critical to ensure affordability does not become a barrier," he said, calling for enhanced need-based and merit-based scholarships, expanded fellowships for research scholars, and targeted support for first-generation learners and students from underserved regions.
Multidisciplinary Universities and Faculty Shortages
The trend of establishing large multidisciplinary higher education institutions (MHEIs) under NEP 2020 has raised expectations for Budget 2026. There is a consensus that financial support is needed to set up and develop such institutions, particularly in areas lacking access to quality higher education.
This expansion has also led to a rising demand for qualified faculty members. Dr. Bhalla emphasized that Budget 2026 must address this gap by providing new faculty positions, improved service terms, and adequate investment in faculty development. He highlighted the need for international exposure, research incentives, and continuous upskilling to maintain teaching quality amid growing demand.
Private Universities Seek Parity and Infrastructure Support
Private universities, which are increasingly educating a larger share of students in the country, are also awaiting clearer policy mandates from the budget. Vishal Khurma, CEO of Woxsen University, noted that realizing India's vision as a global knowledge hub depends on building capacity in both public and private institutions.
He called for targeted funding for faculty upskilling, doctoral training, and competitive research grants, alongside a renewed push to modernize academic infrastructure. One of his key proposals is mandating 10% of Corporate Social Responsibility (CSR) funds for state private and deemed universities operating without subsidies. "This can significantly accelerate the adoption of smart classrooms, digital libraries, AI-enabled learning platforms, and advanced laboratories," Khurma explained.
He also emphasized the need for regulatory and policy parity between Indian private universities and international campuses operating in India, arguing that a level playing field is essential for competitiveness. Expanded need-based scholarships, affordable education loans, and support for first-generation learners, he added, are vital to improving access and retention.
Skills, Technology, and Employability Focus
Across institutions, there is broad agreement that Budget 2026 needs to increase allocations for skill development, especially in new and emerging technologies. Fields such as artificial intelligence, data science, cybersecurity, semiconductors, fintech, climate technologies, and advanced manufacturing are rapidly transforming the job market.
Dr. Bhalla said educational institutions require targeted funding for specialized laboratories, curriculum redesign, and industry-embedded programs to keep pace. Khurma echoed this view, calling for incentives that promote structured industry-academia partnerships, apprenticeships, and live projects to enhance graduate employability and build a future-ready workforce.
Tax Reform to Align with NEP 2020
Beyond funding, experts are advocating for regulatory reforms. CS Dr. Monika Goel, Executive Director & Dean Academics at Manav Rachna International Institute of Research and Studies (MRIIRS), raised concerns over the "accreted income" tax imposed when educational institutions change their legal structure.
Under Section 352 of the Income-tax Act, 2025 (corresponding to Section 115TD of the 1961 Act), institutions converting from tax-exempt to non-exempt forms face tax at the maximum marginal rate—up to 42.74%—on the fair market value of assets minus liabilities. "Such a huge liability can make institutions financially unviable," Dr. Goel stated, arguing that this provision conflicts with NEP 2020, which encourages institutional autonomy, new governance models, foreign university entry, and private investment.
She urged the government to provide full exemption or a safe harbor for conversions and mergers, subject to conditions ensuring assets continue to be used for educational purposes.
The Bigger Picture: Investment in a 'Merit Good'
Dr. Anjali Sane, Professor and Dean at the School of Economics and Commerce, Dr. Vishwanath Karad MIT World Peace University, Pune, placed these expectations within a broader economic framework. She described education as a "merit good" in economics, with a long-term impact on national productivity.
While developed countries allocate over 10% of GDP to education, India spends around 4–5%. Given high GDP growth, persistent digital divides, and skill mismatches among graduates, she argued that Budget 2026 must increase education spending, bridge access gaps, and better align learning with labor market needs to support the Viksit Bharat 2047 vision.
For education sector leaders, Budget 2026 represents more than just increased spending—it is about creating a system that can sustain India's demographic dividend, international ambitions, and resilience for generations to come.
