Draft National Education Policy- 2020 from the Lens of Public Provisioning

 On May 31^st 2019, the Dr. Kasturirangan Committee submitted the draft National Education Policy (NEP) 2019 to the Ministry of Human Resource Development (MHRD). The draft, expected to lead up to the Policy, comes after this long hiatus in the sector that has undergone unprecedented changes since the last policy (1986/1992), especially since the introduction of the economic reforms of the 1990’s.

The draft covers around 24 diverse themes and a plethora of issues related to school education, higher education, technical education and adult education. The challenges and requirements for each sector within education differ immensely and hence require focused attention. Financing is one of those areas which has been accorded substantive attention in the policy document. Although, there is no separate chapter on financing on education, but it has come as an addendum.

The policy has acknowledged the need for higher investment in education and rightly envisioned that to reap maximum benefits from this investment; financing should be largely from public sources. In this regard, the policy recommended for increasing the overall public expenditure (Centre and state) on education from current 10% to 20% in a 10-year period. At the same time, to supplement government spending on education, the draft has suggested alternative avenues of investment through Corporate Social Responsibility (CSR) efforts and philanthropic initiatives by individuals, corporations and communities.

Public resource mobilization through tax collection is the backbone of financing education in India. Although a progressive individual income tax system has been in place in India since 1922, unfortunately only about one-third of total taxes in the country are generated from direct taxes nearly two-thirds, of the total tax revenue comes from indirect taxes. Indirect taxes, especially when imposed mainly on mass consumer goods, widen the income gap and aggravate inequality in the society.   India is also the country with one of the lowest overall tax-GDP ratios (about 17% in 2016-17) among the G20 and BRICS countries.

In the present economic scenario, the direct tax collection has seen a growth rate of merely 5 % so far this year, which is much lower than what was projected.  Government is also anticipating a shortfall in GST collection. Along with this, the recent announcements on cutting corporate tax rates could end up in a massive fiscal slippage of the economy. Undoubtedly, this is going to affect the government financing of social sectors, particularly, education. Unfortunately, the recommendations on financing in the draft NEP appears as a delink from country’s fiscal policy.

 

Objective of the consultation

Given the significance of the new education policy, a discussion on the recommendations on ‘financing’ in the draft NEP calls for an in-depth brainstorming, especially in the current economic scenario. The proposed consultation by RTE forum and CBGA aims to engage in a critical discussion on the draft with a particular focus on fiscal implication of draft NEP in relation to school education. The consultation would like to look at some specific questions like whether the recommended tenure of 10 years to increase expenditure by 10 % for education is too long; what should be the resource sharing pattern between Centre and States to implement suggested reforms in the policy. This discussion is more pertinent in the context of recommendations by 14^th Finance Commission and TOR presented by 15^th Finance Commission. It is also worth a debate and discussion around how ambitious is the recommendations of financing education through Cess, CSR and philanthropic activities as envisioned in the draft.