The Economic Survey 2019-20 focused on wealth creation. But wealth creation depends on job opportunities and household savings. This requires a conducive environment to brew talent and for people to retain what they earn.
However, wealth creation is only possible if human capital is strong. And as education facilitates the development of human capital from the bottom up, education reforms tend to hog the limelight.
At a time when the economy is going through a rough patch and joblessness is high, what young India expected from this budget was not only a course correction towards creating meaningful jobs but also a strategy of how to bridge the trust deficit that the central government has with India Inc. and the entrepreneurial community.
What budget proposed
The budget has earmarked Rs 99,300 crore towards the education sector and Rs 3,000 crore towards skill development for 2020-21. This seems to be inflation-adjusted, increasing only 4.7% from the previous budget.
Saving the demographic dividend through structured educational reforms was one of the underlying objectives of this budget. But the finance minister seems to have walked a fine line.
She enabled the education sector by allowing external commercial borrowings and foreign direct investment to fund educational projects. She talked about developing the quality of teaching through a proposed special bridge-course for teachers, para-medical staff and the care-givers. She also proposed full-fledged online degree programmes.
In addition, the New Education Policy (NEP)—though radical—is yet to see the light of day. This being said, the mix of policy interventions proposed provides us with an opportunity to enhance the quality of education by focusing on inclusivity and improving research and development.
Given the government’s inability to provide the requisite treasury funds to hand-hold the growth of the education sector, which caters to 35% of India’s population, dollar-denominated capital will flow towards cash-flow positive educational ventures that focus on R&D and quality teaching.
As we await the fine print, these reforms will need to be augmented by easing regulatory burden within the sector to make it more conducive for foreign capital. From 2017-18 till date (11 quarters), approximately 95 deals with a total value of about $800 million have taken place in the education sector. The intensity of deal activity in this sector is likely to increase four-fold over the next six quarters, subject to clarity on FDI and ECB norms.
Impact of budget proposals
In order to achieve the common goal of shared prosperity, we would need to ensure that policy recommendations are rooted in reality and go beyond the passivity of political rhetoric.
While the government wants to make India a $5-trillion economy, the budgetary provisions for the education sector might have just made the cut to start a process of developing our ever-growing human capital.
However, a few questions remain. What specific steps will be taken to attract ECB and FDI in the education sector in the next few quarters?
Though the full-fledged online degrees might create inclusivity, will these be accepted by corporate India? Given the importance of technical skills and Skill India, why was skill development not given due importance in this budget?
And, the larger question remains as to how qualified graduates will be made employable to cater to the industry’s demands, which are changing biannually in today’s time.
Atul Thakkar heads the education practice at Anand Rathi Group. Shahan Sud is an investment banking analyst at Anand Rathi Advisors.