The National Education Policy (2020) has called for public expenditure on education to rise to 6% of India’s GDP. This is a reasonable target if India aspires to be a significant power. According to data from the World Bank, Australia (5.2%), Brazil (6.1%), and Canada (5.2%) are among the countries worldwide that have public expenditure in that range. We are currently far below that target. In 2021-2022, India’s public expenditure on education was 3.1% of the GDP. In 2022, the Finance Minister, , Nirmala Sitharaman, announced an increase of 18% over the previous year. This was very welcome news after the slight decrease in the previous year. But the reality is that an increase in this range is insufficient to reach the targeted 6% in the near future. With the year-on-year increase of 15% in the education budget for the next decade, we will still be below that target. All the same, increasing well above that kind of increase in the national budget is unrealistic. As a percentage of our central government budget, education is already at 16%, the third highest item on the budget. This is roughly the same percentage of China's budget during the 90s, the decade where they achieved transformational progress in developing a world-class public education ecosystem.
We could achieve a similar transformation by reimagining how we utilise budgeted expenditure on education. Our central budget on education expenditure is divided into two main areas: school education and literacy, and higher education, with a rough proportion of 60:40. We should innovate on disbursement models in each area separately. Let us consider some novel disbursement models for funding higher education.
A potential game-changing scheme would be to use funds allocation to incentivise private giving to public and private colleges. Some large corporations have a scheme for matching charitable contributions made by their employees to the charity of their choice. An analogous scheme would be to set aside a portion of the budgeted amount to match donations made by alums and wealthy individuals to an educational institute. We do have schemes in place to give them tax relief. But this one serves a different purpose. The leverage of additional contributions would incentivise individuals to donate more to educational institutions. At the same time, the management of academic institutes would work harder to attract private funding sources. To safeguard against misuse, this matching of individual contributions can be restricted to the top 50 or 100 nationally ranked (NIRF-rated) colleges. Moreover, the government should only match donations that advance the key performance measures.
Read more at: https://economictimes.indiatimes.com/small-biz/sme-sector/effective-use-of-govt-budget-on-education-the-need-to-have-a-a-performance-linked-incentive-model/articleshow/96534356.cms