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How The Modi Govt. Reduced The Budget For Higher Education Without Anyone Noticing

Posted by Avinash Tavares in Business and Economy, Politics, Society
February 6, 2018

Arun Jaitley’s Budget is disappointing. The government has made some big announcements in the areas of healthcare, agriculture and industry but many economists have pointed out that the numbers don’t add up and that this budget is focused more on the 2019 elections than implementing actual reforms. Over the last few years, Budget announcements have become a marketing tool whenever elections are around the corner. But does that mean we can allow governments to get away with poorly planned budgets? Definitely not, especially when the budget has a long-term impact.

Irrespective of whether one favours a Budget which leans towards socialist or capitalist policies, the most important category for our country must be education. Although education is a state subject, the job of the Centre is to set an example for all states, so that they spend more on education. They must provide the capital needed to improve all levels of education.

Overall Budget For Education

The money allocated for education is ₹85,010 crores. That’s a mere 3.8% rise from last year and 3.4% of the total Budget. Considering the population growth, inflation, the urgent reforms needed for our education system to make students employable and the pressure on existing education infrastructure, this number should have increased to at least 5% of the Budget. A closer look at the breakup reveals even more disappointing facts.

Secondary And Higher Education Cess (SHEC) And “Madhyamik And Uchchtar Shiksha Kosh” (MUSK)

The CAG recently pointed out that ₹83,497 crores were collected as cess for secondary and higher education, which has not been utilised. Essentially, if the government wanted, they had the flexibility to allocate nearly twice as much. Instead, they created a non-lapsable pool in the public account for secondary and higher, education known as “Madhyamik and Uchchtar Shiksha Kosh” (MUSK) into which all proceeds of “Secondary and Higher Education Cess” are said to be credited.

In the Budget, the government has transferred a mere ₹7,690.52 crores from MUSK, which is less than 10% of the ₹83,497 crores, as pointed out by CAG.

The disappointing part is that the government has neither created any new schemes for the utilisation of MUSK, nor has it used the MUSK funds to augment the existing funding mechanism for existing schemes. Instead, the government has reduced its burden of funding these schemes by replacing it with the funds from MUSK. For example, for the Interest Subsidy and contribution for Guarantee Funds, the government has reduced its Budgetary support from ₹1,950 crores last year to ₹30 crores this year. ₹2,120 crores will be supported by the MUSK fund. Scholarship for college and university students has been reduced from ₹294 crores to ₹40 crores, with ₹300 crores supported by MUSK. The overall Budget of UGC has been reduced from ₹4,922.74 crores to ₹4,722 crores. Budgetary support of the government has been reduced this year to ₹3,022 crores. The balance of ₹1,700 crores will be supported by the MUSK fund.


Rashtriya Uchhatar Shiksha Abhiyan (RUSA) is a centrally sponsored scheme which was initiated in 2013. It aims to provide strategic funding to higher and technical institutions. This scheme required the participation of the State Higher Education Council to plan and execute the scheme.

Higher Education Financing Agency (HEFA), is a not-for-profit organisation set up in collaboration with Canara bank to leverage funds from the market and supplement them with donations and CSR funds. These funds are to be used to finance improvement in infrastructure in our top institutions and be serviced through internal accruals.

Both these schemes are essentially meant for the improvement of higher and technical institutions. While RUSA has the tell-tale signs of socialism, HEFA is market and capitalist driven. While both can co-exist since on the face of it, RUSA is funded by the taxpayer and HEFA is funded by market funds, donations, and CRS funds. However, it appears that RUSA is being given a step-motherly treatment by this government. To me, RUSA is transparent. All the information about the scheme is available online. HEFA, on the other hand, is anything but transparent. There is a fancy website with names of prominent people who are in charge of this program. Other than that, there is almost no information available about its implementation.

While last year, ₹250 crores were allocated for HEFA, this year, the allocation has been increased to ₹2,750 crores. For RUSA, the gross Budgetary support has been reduced from ₹1,300 crores to ₹200 crores. ₹1,200 crores have been allocated for RUSA from the MUSK fund. The Government needs to explain why  RUSA, which is an existing scheme and is in desperate need of more funds, has been allocated just ₹1,400 crores while a relatively newer scheme has been allocated nearly twice as much. Has RUSA failed in achieving its objectives?

The Verdict

If you remove the capital investment under HEFA (₹2,750 crores), the government has decreased the Budget for higher education from ₹34,612.46 crores to ₹32,258.29 crores. This is downright shocking and unacceptable. We are already in a crisis with unemployable graduates.

We can ignore the saffronisation of education, the proposals to include pseudo-science and myth in our education curriculum. But to cut the higher education Budget is as good as derailing the future of the youth and of this country.