Financial planning for

education in India
"If you think education is expensive, try ignorance”.
- Ann Landers
In India the list of power of the government has been categorized into
three- List-1, List-2 and list-3.
1st list consists if the areas on which central government holds power
2nd list consists of the areas on which the state governments hold power
And the 3rd list consists of the areas on which both central government
and the state governments hold power jointly known as concurrent list.
The 3rd list means, list of items on which both central and state
governments hold power jointly in India. Until 1976, education had been
in list-2 excepted for only a few areas of it, And Since 1976 ( through a
constitutional amendment) it has been in the third i.e. in the concurrent
list.
• Education holds the key to skilling, employability, and, in turn,
contribution to realisation of faster growth of GDP. Education is
in the concurrent list, indicating a role for both union and
state governments. The education department is one of the
largest in terms of revenue expenditure at the state level, and
its budget includes payment of salaries of the elementary and
secondary education teachers.
• In terms of government spending, the Union Budget has pegged
an outlay of nearly INR 80 thousand crore for the education
sector for 2017-18. Of this nearly 60 percent (INR 46 thousand
crore) is for the school sector and the rest for higher
education.
• Financial resources play an important role in the expansion and
growth of the educational sector which is not only restricted to
government spending but households, non-governmental agencies
and corporate investment contributes significantly. But the role
of the government still remains pervasive and important. On the
recommendation of Education (Kothari) commission (1966), the
Government of India quantitatively fixed the target of investing 6
per cent of Gross National Product (GNP) on education by the
public exchequer by 1986. But the goal of allocating 6 per cent
of (GNP) on education remained elusive. Currently, India spent
4.54 per cent of GDP on education.
• Components of Expenditure in India (Expenditure in Education India- The
Plan Expenditure The Non- Plan Expenditure)
• The educational budget in India is generally, divided into two heads: i.e. plan
(also called developmental) and non-plan (also called committed)
expenditure. Plan expenditure is that part of total budget expenditure,
which is meant for financing the schemes and programmes especially framed
under the current five-year plan or the unfinished tasks of the previous
plans. So the plan expenditure indicates the direction of changes in the
education sector. Plan expenditure is mainly for development purposes, such
as the building of new schools or the introduction of new programme in a
school (Varghese & Tilak, 1991).
• While non-plan expenditure is designed for the maintenance of the system. It
is the expenditure on operating and maintaining existing education
infrastructure. So at the end of a five year plan, the recurring parts of plan
expenditure on different programmes or schemes become part of non plan
expenditure, which, in turn, enhances the non-plan component of the
education budget. Non-plan expenditure is expected to increase steadily
over the years. Plan expenditure on education is relatively small in size and
a huge proportion of expenditure on education is of non-plan in nature.
While both plan & non-plan expenditures are important for the growth of
education sector.
• In the education sector, salary of teachers and administrative staff (other
than those recruited under plan schemes), expenditure on repair and
maintenance of schools, expenditure on replacement of non-functional
teaching equipment and similar items are non-plan expenditure. Expenditure
on construction of new schools, additional classrooms, new toilets, salary of
additional teachers and non-teaching staff etc come under Plan expenditure.
• Another distinction is between expenditure on Revenue Account and
Capital Account. The Revenue Account consists of the expenditure incurred
on items such as administration, direction, and inspection; salaries of
teaching and non-teaching staff; scholarships and students aid programmes,
maintenance of buildings, apparatus, equipment and furniture; laboratory
consumables; games and sports; and teaching and learning material, etc.
This type of expenditure has to be incurred every year in order to run the
system and hence is called the recurring expenditure also. The Capital
Account includes the expenditure made on the construction of buildings,
libraries and laboratories; purchase of equipment and furniture, etc. it is
also known as nonrecurring expenditure. It actually represents the physical
capital formation side of education system.
• It is to be noted that out of total public expenditure on higher education in
the country by all states and union territories, the proportion of expenditure
incurred under capital account was very minuscule for example, just (1.82
per cent) during 2003-04 (MHRD, 2003-04).
• For pre-service- the govt and gvt aided teacher education institutions
are financially supported by the respective state govt.
• Under centrally sponsored scheme on teacher education, the central
govt also support over 930 instns, including DIETs, CTEs, IASEs and
BITEs
• For in-service, financial support is largely provided by the central govt
under SSA, RMSA etc.
• For 11th Plan period the funding pattern has been revised as: 65:35
for the first two years of the Plan, 60:40 for the third year, 55:45 for
the fourth year and 50:50 thereafter. With respect to the eight North-
Eastern States, the funding pattern is 90:10, with the central share re-
sourced from the 10 percent earmarked funds for the North-Eastern
Region from the SSA's Central Budget. However, with the
operationalisation of the Right of Children to Free and Compulsory
Education (RTE) Act, with effect from 1 April 2010, the funding pattern
in respect of RTE-SSA program for the period 2010-11 to 2014-15 has
been revised as 65:35 for States/UTs other than North-Eastern States.
For the eight North-Eastern States, the existing fund sharing pattern of
90:10 between the Centre and States would continue.
The projection for the Ministry of Human Resource Development
(MHRD) for 2019-20 does not look very cheerful for the
education sector, especially school education. The projected
budgetary allocation for Department of School Education and
Literacy (DSEL) for 2019-20 is estimated to be Rs. 54,959 crore,
approximately a 10 percent increase from 2018-19 (Budget
Estimate).
The expenditure projection at the scheme level for the year
2019-20 shows a similar picture. Between 2018-19 and 2019-20,
the school education department projected a 10 percent
increase in Mid-day Meal (MDM) and a 10 percent increase in the
National Education Mission (includes Sarva Shiksha Abhiyan
(SSA), Rashtriya Madhyamik Shiksha Abhiyan (RMSA) and Teacher
Training and Sakshar Bharat). It gives the impression that the
Union Budget for school education in 2019-20 is not going to be
different from the earlier practice of incremental budgeting.