Mumbai: India is not investing adequately in its demographic dividend--the world's largest--and its potential will slide further if the government’s last budget before general elections does not acknowledge this fact.

India’s expenditure on higher education as a percentage of its total budget has remained largely stagnant, hovering around an average 1.47% over 12 years to 2018-19. This stagnation accompanies the datum that India has the world's largest population of young people aged 15 to 24, (241 million or 18% of all Indians). India is ahead of China (169.4 million), according to a 2017 report by the United Nations Department of Economic and Social Affairs.

The budget that will be presented by the ruling Bharatiya Janata Party (BJP) government on February 1, 2019, has to take into account the fact that by 2020, 34.33% of India’s population will be between 15 and 24 years of age, as per this 2017 report by ministry of statistics and programme implementation (MOSPI). To ensure that this burgeoning youth population gets the kind of higher education needed to compete at the global level, it is important that the government steps up its budget allocation, experts said.

“Higher education was allocated around Rs 35,000 crore in 2018-19--that is a small amount for a country the size of India,” said Amit Kapoor, chair of the Institute for Competitiveness, India, the Indian chapter of the global network of the Institute for Strategy and Competitiveness at Harvard Business School.

Funding for universities is also inconsistent with demand. Among public universities, around 97% of students study in state universities, only the remaining 3% in central universities but 57.5% of the government’s higher education budget goes to central universities and premier institutes like IITs and IIMs. State universities need more funds and resources given the student load they carry and are suffering for this neglect, said experts.

State universities are funded partly by the central government through the University Grants Commission and Rashtriya Uchchatar Shiksha Abhiyan (RUSA or National Higher Education Scheme) and partly by state governments. The process of receiving funds from the centre is much more efficient than state governments, said Antara Sengupta, fellow at the think tank Observer Research Foundation (ORF), working on higher education, skills education and training.

In 2018-19, the government’s allocation for RUSA was Rs 1400 crore, up by Rs 100 crore since 2017-18. The allocation for UGC reduced from Rs 4922.74 crore to Rs 4722.75 crore.

India’s enrollment rates in higher education are also low. Over 70% of 18- to 23-year-olds in the country are not enrolled in a higher educational institute, as per the All India Survey on Higher Education, 2017-18. Experts we spoke to recommended sharper focus on improving the enrollment rates in institutions of higher learning and the quality of research they conduct.

Education has been strongly linked to poverty alleviation. On average, one year of education is associated with a 10% increase in wage earnings, said a 2014 United Nations Educational, Scientific and Cultural Organisation (UNESCO) report. It also protects the working population from exploitation by increasing the band of opportunities, improves health, reduces income disparities and drives economic progress, said the report.

How India compares with the world in budgeting for higher education

In 2000, India and China spent almost the same percentage of their gross domestic product (GDP) on research and development, as per UNESCO: India spent 0.77% of its GDP and China 0.89%. Since then, however, China has been steadily increasing its expenditure, spending 2.11% in 2016. India has stayed in the range of 0.73%-0.87%; this fell to 0.62% in 2015.

Indian universities have consistently ranked low in global university rankings. Not a single Indian university has ranked in the top 200, as per the Times Higher Education World University Rankings 2019 and only five institutes made it to the top 500. These rankings are mainly based on the number of teachers, quality of teaching, amount of research and the quality of the research.

India’s central universities suffer acutely for want of teaching resources--33% of vacancies remained unfilled as on July 2018, as IndiaSpend reported on August 16, 2018. Also, India’s expenditure on research is 0.62% of the GDP, lower than all the countries in the BRICS group and less than one-third of the United States (2.74%) and Europe (1.85%).

“Higher education will stand to be meaningless without quality publications and research, and it is time we expand research from just specialised and premier institutes to Central and State universities too,” said Sengupta

Budgeting for higher education: NDA vs UPA

The proportion of allocation to higher education has not changed much since 2007-08. The highest percentage of allocation since 2007-08 was in 2017-18 when the BJP-led National Democratic Alliance (NDA) government spent 1.62% of the budget on higher education. The lowest proportion of allocation too was under the current NDA government--1.29% (Rs 23152.48 crore) in 2014-15.

Source: Union Budget

Government allocation for higher education increased by 0.42% from Rs 34,862.46 crore in 2017-18 to Rs 35,010.29 crore in 2018-19. But the proportion of the allocation to the total budget fell in the period--from 1.62%, by 0.19 percentage points, to 1.43%.

Within the higher education budget, the government reduced grants for central universities from Rs 7,261.42 crore in 2017-18 to Rs 6,445.23 crore in 2018-19. Support for IITs too fell from Rs 7,503.5 crore in 2017-18 to Rs 5,613 crore.

Capital expenditure for higher education was zero in 2015-16. The government, in the 2016-17 budget speech, announced the launch of Higher Education Financing Agency (HEFA), a joint venture of the ministry of human resource and development and Canara Bank, to help premier institutions build infrastructure. In 2016-17, capital expenditure rose to Rs 1 crore when HEFA was formed. In 2017-18, it increased to Rs 250 crore; in 2018-19, the allocation increased 10 times to Rs 2,750 crore.

HEFA will provide Rs 1,00,000 crore in the next four years. Till now, about Rs 12,700 crore of loan has already been sanctioned, said the year end report by ministry of human resource and development, released on January 11, 2019.

The government’s increased funding for HEFA might not solve many problems, said experts. “Though HEFA may come as an instant relief for some of the urgent upgrades, one must keep in mind that it is ultimately a loan that the institute will have to repay,” said Sengupta. “This would mean that our premier institutes will have to work doubly hard to raise funds to pay back the loan, which will be in addition to the funds they have been raising so far.”

What higher education priorities should be

The government should focus more on state public universities if it wants to improve the gross enrollment ratio and quality of education, experts told us.

“The government would be required to upgrade and invest in central and state universities as well as the affiliated colleges,” said Sengupta. “Some of the state universities have huge potential to excel but are suffering the neglect of the central as well as the state governments.”

A 2017 standing committee report on higher education highlighted this issue.

Also, 65% of the budget of the University Grants Commission, the higher education regulator, is utilised by central universities and their colleges while state universities and their affiliated colleges get only the remaining 35%, said the report.

“State universities are in a really bad state,” said Anita Rampal, dean and retired professor at the faculty of education, Delhi University. “If the government continues to give more funds to institutes that are doing better, then it is abandoning the state universities and the students who most need good quality higher education”

(Shreya Raman is a data analyst with IndiaSpend.)

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