Education Budget Share Explained: NEP's 6% of GDP Target, Kothari Commission and the Gap

The absolute figure has risen: In nominal rupee terms, allocations to the Ministry of Education have grown almost continuously. The Ministry received ₹99,300 crore in 2020-21, ₹1,04,278 crore in 2022-23, ₹1,20,628 crore in 2024-25, ₹1,28,650 crore in 2025-26 and ₹1,39,289 crore in 2026-27. Each year the government can accurately state that this is the "highest ever" allocation.

Why the absolute figure is a weak indicator: The total size of the Union Budget has itself grown at roughly 10 per cent a year on average since 2009. If prices of the same goods and services rise with inflation, a ministry's allocation must rise simply to buy the same quantity of teachers, textbooks, meals and buildings. An increase that merely keeps pace with the growth of the Budget signals no change in priority at all.

The correct metric: To assess whether a sector has gained or lost relevance in policy terms, the appropriate measure is its allocation as a percentage of the total Budget for the year. On that measure, education's share has fallen from roughly 4.6 per cent in 2013-14 to about 2.5 per cent in 2025-26 — a decline of nearly half.

Real versus nominal: A further correction is to adjust for inflation. Between 2017-18 and 2024-25, the Ministry's expenditure grew at a compound annual growth rate of about 5 per cent. The Parliamentary Standing Committee on Education recommended in 2025 that annual allocation increases should be in the range of 8 to 10 per cent so that departments merely keep pace with inflation.

The Union-state distinction: A crucial caveat is that the Union Budget is not the whole picture. Education is a Concurrent List subject and the bulk of actual spending on schools — teacher salaries above all — is borne by state governments. A falling central share does not automatically mean a proportionate fall in total public spending, but it does mean the Centre is carrying a smaller part of the load.

The combined figure: According to the Ministry of Education's own analysis of budgeted expenditure, the Centre and states together spend around 4.1 per cent of GDP on education, as of 2022-23. The Economic Survey, using a narrower accounting head, has reported figures closer to 2.7 to 2.9 per cent of GDP. The difference arises from whether education spending by departments other than the education departments is counted; students should note both figures and the reason for the divergence.

International comparison: On the broader measure, India's 4.1 per cent compares with South Africa at about 6 per cent, the United Kingdom at 5.9 per cent, the United States at 5.4 per cent, Germany at 5.2 per cent, China at 4.0 per cent and Japan at 3.3 per cent.

The UNESCO benchmark: The Education 2030 Framework for Action recommends that governments allocate 4 to 6 per cent of GDP and 15 to 20 per cent of total government expenditure to education. India meets the lower bound of the first benchmark on the broader measure but falls well short of the second at the central level.

Sustainable Development Goal 4: SDG-4 commits countries to ensure inclusive and equitable quality education and promote lifelong learning opportunities for all by 2030. Financing adequacy is a recognised means of implementation for this goal.

The Kothari Commission: The origin is the Education Commission (1964-66), chaired by Dr. D. S. Kothari, popularly called the Kothari Commission. It was the first comprehensive review of Indian education after Independence, and it recommended that investment in education be raised to 6 per cent of national income by 1985-86.

National Policy on Education, 1968: The first National Policy on Education, framed on the Commission's recommendations, formally accepted the 6 per cent goal.

National Policy on Education, 1986 and the 1992 revision: The 1986 policy, and the Programme of Action revised in 1992 following the Ramamurti Committee review, reiterated that the outlay on education would be stepped up to 6 per cent of national income.

Tapas Majumdar Committee, 1999: This committee estimated the cost of universalising elementary education for children aged 6 to 14 and provided the financial basis for the constitutional amendment that followed.

National Education Policy, 2020: The current policy again recommends that the centre and states together raise public investment in education to 6 per cent of GDP at the earliest. The target has therefore been restated in every major education policy document for six decades without being met, which is the central fact a student should retain.

Original position: In the Constitution as adopted, education was a State List subject, with limited Union entries such as coordination and determination of standards in institutions of higher education.

The 42nd Amendment, 1976: Education was transferred from the State List to the Concurrent List (List III, Entry 25). This made education a shared responsibility of the Centre and the states, and is the constitutional basis for centrally sponsored schemes in school education.

Union List Entry 66: The Centre retains exclusive power over the coordination and determination of standards in institutions of higher education and research, and in scientific and technical institutions. This entry underpins bodies such as the UGC and AICTE.

Directive Principles: The original Article 45 directed the State to provide free and compulsory education for all children until the age of 14 within ten years of the commencement of the Constitution. Article 46 directs the State to promote the educational and economic interests of the Scheduled Castes, Scheduled Tribes and other weaker sections.

Unni Krishnan and the judicial turn: In Unni Krishnan, J.P. v. State of Andhra Pradesh (1993), the Supreme Court held that the right to education flows from the right to life under Article 21, read with the Directive Principles, up to the age of 14 years.

The 86th Amendment, 2002: This inserted Article 21A, making free and compulsory education for children aged 6 to 14 years a fundamental right. It simultaneously substituted Article 45 to direct the State to provide early childhood care and education for children below six years, and inserted Article 51A(k) making it a fundamental duty of a parent or guardian to provide educational opportunities to a child between six and fourteen.

The RTE Act, 2009: The Right of Children to Free and Compulsory Education Act, 2009 operationalised Article 21A. It prescribes norms for pupil-teacher ratios, infrastructure, teacher qualifications, a ban on screening procedures and capitation fees, and a 25 per cent reservation for children from disadvantaged groups in private unaided schools.

School education — the big three: Of the ₹83,562 crore allocated to school education for 2026-27, Samagra Shiksha receives ₹42,100 crore (30 per cent of the Ministry's total budget), autonomous bodies such as Kendriya Vidyalaya Sangathan, Navodaya Vidyalaya Samiti and NCERT receive ₹16,867 crore, PM POSHAN receives ₹12,750 crore and PM SHRI receives ₹7,500 crore.

Samagra Shiksha: Launched in 2018, it subsumed Sarva Shiksha Abhiyan, Rashtriya Madhyamik Shiksha Abhiyan and teacher education schemes into a single integrated scheme from pre-school to Class 12. It is a centrally sponsored scheme with a Centre-state funding ratio of 60:40 in most states and 90:10 in Himalayan and north-eastern states. On average about 86 per cent of its allocation is utilised annually.

PM POSHAN: Launched in 2021-22, it subsumed the Mid-Day Meal Scheme and provides one hot cooked meal a day to children from pre-primary to Class 8, covering nearly 11.2 crore children. It aims to reduce stunting, underweight and anaemia among children.

PM SHRI: The scheme aims to upgrade about 14,500 government schools as exemplar schools aligned with NEP 2020, with a central share of ₹18,128 crore and a state share of ₹9,232 crore for 2022-23 to 2027-28. As of January 2026, 13,070 schools had been upgraded.

Higher education: Of ₹55,727 crore, central universities receive ₹17,440 crore, IITs ₹12,123 crore, NITs and IIEST ₹6,260 crore, UGC and AICTE ₹3,939 crore, student financial aid ₹2,160 crore, PM USHA ₹1,850 crore and IISERs ₹1,319 crore.

PM Vidyalaxmi: Approved in November 2024, this scheme guarantees 75 per cent of the outstanding amount on education loans up to ₹7.5 lakh and extends interest subvention on loans up to ₹10 lakh for one lakh students annually, with an outlay of ₹3,600 crore for 2024-25 to 2030-31.

Learning outcomes are declining, not merely stagnant: The National Achievement Survey recorded a fall in average scores between 2017 and 2021 across grades. In language, the Class 3 average fell from 67 to 62 and the Class 8 average from 56 to 53. In mathematics, the Class 5 average fell from 53 to 44 and the Class 8 average from 42 to 36.

Scores fall as children move up: The PARAKH Rashtriya Sarvekshan, 2024, conducted by NCERT, found that average scores in language and mathematics decline as children progress from Grade 3 to Grade 6 to Grade 9 — the opposite of what a functioning system should produce.

Enrolment collapses at the secondary stage: NEP 2020 targets 100 per cent Gross Enrolment Ratio at all school levels. As of 2024-25, GER was 91 per cent at primary, 90 per cent at upper primary, 79 per cent at secondary and only 58 per cent at higher secondary. The transition rate from Class 10 to Class 11 is 75 per cent.

Why children drop out: Analysis of PLFS data cited in the Economic Survey 2025-26 shows that among out-of-school adolescents aged 14 to 18, 44 per cent are out of school to supplement household income and 28 per cent to attend to domestic chores. Only 1 per cent cite distance to school. The binding constraint is therefore the opportunity cost of schooling, not physical access.

Teacher shortages: As of 2024-25, nearly 10 lakh teaching posts were vacant. In higher education, 29 per cent of teaching posts in central universities were vacant as of December 2024, including 56 per cent of professor posts. Vacancy rates were 39 per cent in IITs and 54 per cent in IIITs.

Unqualified teachers: As of 2024-25, about 52 per cent of pre-primary teachers and more than 10 per cent of teachers at every other school level were not professionally qualified as defined by the National Council for Teacher Education.

Falling investment in teacher training: Expenditure on teacher training under Samagra Shiksha has declined overall since 2019-20. Under NISHTHA, only 43 per cent of targeted teachers and 49 per cent of targeted school heads had been trained as of January 2026.

Chronic under-utilisation: Money allocated is not always spent. Funds for research and innovation in higher education saw only 47 per cent average utilisation between 2017-18 and 2024-25. PM USHA averaged just 16 per cent utilisation between 2022-23 and 2024-25. The Standing Committee has also flagged bunching of expenditure in the final quarter, recommending that last-quarter spending be capped at 33 per cent of the allocation.

The point this establishes: The constraint is not purely financial. Absorptive capacity, recruitment, teacher quality and household economics all bind alongside money. Higher allocations are a necessary but not sufficient condition for better outcomes.

The institutional push: The Union government created a dedicated Ministry of Skill Development and Entrepreneurship in November 2014, and launched the Skill India Mission and Pradhan Mantri Kaushal Vikas Yojana in 2015. The National Policy on Skill Development and Entrepreneurship, 2015 set the framework.

The funding reality: Despite this prominence, the Ministry's share of the Union Budget has remained a fraction of one per cent. Budget-data analyses place it between roughly 0.03 per cent and 0.11 per cent across the last decade, with the share in recent years around 0.05 to 0.06 per cent.

The pattern of in-year cuts: The more revealing pattern is the gap between what is announced and what is spent. In 2025-26 the Ministry's Budget Estimate of ₹6,100 crore was revised down to ₹2,703.54 crore — a cut of over 55 per cent within the same financial year. For 2026-27, the Budget Estimate has been raised to ₹9,885.80 crore, of which ₹6,140.50 crore is for PM SETU, a new centrally sponsored scheme for upgrading Industrial Training Institutes.

Why this matters for the demographic dividend: As of 2023-24, only about 26 per cent of Indians aged 15 to 29 had received vocational training, against roughly 80 per cent in Japan, 68 per cent in the United Kingdom and 52 per cent in the United States. NEP 2020 aims to expose at least 50 per cent of all learners to vocational education by 2035; as of December 2025, skill training was offered in about 25,000 schools covering roughly 35 lakh students.

The comparison: Twelve years ago, education and health together received about 6.5 per cent of the Union Budget while the Ministry of Road Transport and Highways received about 1.8 per cent. Today education and health together receive roughly 4.5 per cent while roads and highways alone receive close to 6 per cent.

The argument from human capital: The case for reallocation is that physical infrastructure without human capability yields limited returns. A country cannot build a knowledge economy, or realise a demographic dividend, if learning outcomes are falling and half the workforce lacks vocational training. This is the perspective articulated in the analysis by Udit Misra in The Indian Express, which invokes the economist John Kenneth Galbraith's warning about societies over-investing in things and under-investing in people.

The counter-argument from constitutional design: Education is a Concurrent List subject on which states carry the dominant expenditure burden — chiefly teacher salaries, which are the single largest line item in school education. National highways, by contrast, are a Union subject under the Union List. It is therefore structurally expected that the Union Budget carries a larger relative weight of roads than of school education. Comparing the two shares directly can mislead unless the federal division of responsibility is accounted for.

The counter-argument from growth: A second defence is that infrastructure spending has high fiscal multipliers, expands the tax base and finances future social spending; that education spending is constrained by absorptive capacity rather than allocation, as the utilisation data show; and that outcome-focused reform matters more than input volume.

The rebuttal: Against this, it is argued that even accounting for federal division, the central share has halved while the central Budget itself has grown; that the Centre sets national policy through NEP 2020 and therefore bears responsibility for financing it; and that low utilisation is itself partly a consequence of weak institutional capacity, which requires investment to fix rather than serving as a reason to withhold it.

The immediate context: The NEET-UG examination conducted on 3 May 2026 for over 22.7 lakh candidates was cancelled on 12 May 2026 after investigations indicated substantial overlap between pre-circulated material and the actual question paper. A CBI investigation is under way and a re-examination has been conducted.

The legislative response already in place: The Public Examinations (Prevention of Unfair Means) Act, 2024 was passed by Parliament in February 2024 and brought into force on 21 June 2024. It applies to examinations conducted by the UPSC, SSC, Railway Recruitment Boards, banking recruitment bodies, the National Testing Agency and central government departments. All offences under it are cognizable, non-bailable and non-compoundable. General offences carry imprisonment of three to five years and a fine up to ₹10 lakh; organised paper leaks carry five to ten years and a minimum fine of ₹1 crore; a service provider can be fined up to ₹1 crore and barred for four years.

The committee route: After the 2024 NEET controversy, a seven-member high-powered committee chaired by former ISRO Chairman K. Radhakrishnan was constituted to recommend reforms to the examination process, data security protocols and the structure of the NTA. It made roughly sixty recommendations.

The connection to capacity: The recurrence of leaks despite a stringent statute and an expert committee's recommendations points to an enforcement and institutional-capacity problem rather than a legislative gap. This is the same category of constraint that appears in the education budget data — money and law exist on paper, but the administrative machinery to convert them into outcomes is thin. Reported analyses of exam-leak prosecutions over the past two decades indicate very few convictions, with most cases stalled in litigation or closed.

Regulatory consolidation: The Viksit Bharat Shiksha Adhishthan (VBSA) Bill, 2025, introduced in the Lok Sabha on 15 December 2025, proposes a single regulator for all higher education institutions, replacing the University Grants Commission, the All India Council for Technical Education and the National Council for Teacher Education. It provides for three councils — regulatory, accreditation and standards. The Bill was referred to a Joint Parliamentary Committee on 16 December 2025.

Research funding: The MERITE scheme, a central sector scheme with an outlay of ₹4,200 crore for 2025-26 to 2029-30, of which about half is a World Bank loan, aims to improve research and innovation across 175 engineering institutions and 100 polytechnics. Four AI Centres of Excellence have been established or announced in health, agriculture, sustainable cities and education.

Budget 2026-27 announcements: Five university townships are proposed in industrial and logistics corridors, and gaming and content-creator laboratories are proposed in 15,000 secondary schools and 500 colleges with support to the Indian Institute of Creative Technologies, Mumbai.

Foundational learning: The NIPUN Bharat Mission, launched in 2021, targets universal foundational literacy and numeracy by 2026-27. The Foundational Learning Study, 2022 found that 52 per cent of students up to Grade 3 met minimum proficiency standards in numeracy and 54 per cent in English.

Anchor allocations to a rule rather than a headline. The Standing Committee's recommendation of an 8 to 10 per cent annual increase, or a floor expressed as a share of total expenditure, would prevent the situation where "highest ever" allocations coexist with a halving relative share.

Fix absorptive capacity before, or alongside, raising outlays. Utilisation rates of 16 per cent for PM USHA and 47 per cent for research funding indicate that additional money would not currently be spent. Simplifying state proposal processes, front-loading releases and building project-appraisal capacity in states are prerequisites.

Treat teacher recruitment as the binding constraint. Filling the roughly 10 lakh vacant school posts and the 29 per cent vacancy in central universities through regular rather than contractual appointment would do more for outcomes than most new schemes. Contractual recruitment in central schools has risen sharply and should be reversed.

Restore and expand teacher-training expenditure. With 52 per cent of pre-primary teachers professionally unqualified and NISHTHA coverage below half its target, declining teacher-training spend under Samagra Shiksha is the clearest example of a false economy.

Shift the secondary-stage problem from access to affordability. Since 44 per cent of out-of-school adolescents leave to supplement household income, conditional transfers, stipends and part-time schooling models will do more than building more classrooms.

Integrate vocational education from the middle stage. The Economic Survey 2025-26 recommends integrating skilling from Grade 6 to 12. Aligning school education with national skilling priorities addresses both the dropout problem and the low vocational-training coverage.

Make skilling allocations credible. A ministry whose budget was cut by more than half within a single financial year cannot deliver on the demographic-dividend promise. Multi-year committed outlays with protected floors would improve implementation reliability.

Reform financing of state higher education. Since state public universities teach the majority of Indian students but contribute only about 15 per cent of research publications, targeted central support tied to faculty recruitment and research capacity would have disproportionate returns.

Move exam integrity from statute to systems. The Public Examinations Act, 2024 supplies deterrence on paper; the recurrence of leaks calls for question-bank randomisation, insider vetting, chain-of-custody auditing, faster prosecution and a permanent structural review of the NTA.

Build cooperative federalism into education financing. Since states bear most of the burden, the Centre should combine any increase in its own share with predictable, timely and untied transfers, and use the Finance Commission and the Inter-State Council to align national policy with state fiscal capacity.