As Union Budget 2026 approaches, education experts are urging greater investment in universities, skills, and scholarships.

As India prepares for Union Budget 2026 amid global economic uncertainty, the education sector is emerging as a critical stabiliser—one that policymakers are increasingly looking to strengthen for long-term growth. With international education expenses on the rise, global mobility trends shifting, and the National Education Policy (NEP) 2020 entering a crucial phase of implementation, the education community is of the view that the upcoming Budget needs to prioritize home-grown capacity building. With more funding, tax support, and skill development, India’s education system can expand, keep up with the changing economy, and get students ready for the future.

Building domestic capacity as global mobility slows

One of the most visible shifts in recent years has been the slowdown in Indian students pursuing education abroad. According to Dr. Prashant Bhalla, President, Manav Rachna Educational Institutions, this trend is already influencing how families and institutions plan for higher education.“In times of global economic uncertainty, the education sector is expected to work as an anchor supporting growth with innovation-led and indigenous solutions,” Dr. Bhalla said. He pointed to rupee depreciation and rising overseas education costs as factors pushing students to consider domestic options more seriously.As the trend of global mobility in 2025 shows a decline in the number of outgoing students, Dr. Bhalla said that Budget 2026 should concentrate on improving the overall capacity of higher education in India and the global benchmarking of Indian institutions so that they can compete in the international market while fulfilling the domestic requirement.

Sustaining enrolment growth without pricing students out

India’s Gross Enrolment Ratio (GER) in higher education has risen from 23.7% to 28.4% in recent years—a significant gain, but one that comes with new pressures. As enrolments increase, institutions are struggling with infrastructure gaps, faculty shortages, and affordability concerns.Dr. Bhalla stressed that increased funding for student hostels, digital infrastructure, and campus facilities will be crucial to sustaining this momentum. “Strengthening scholarship and financial aid mechanisms is equally critical to ensure affordability does not become a barrier,” he said, calling for enhanced need-based and merit-based scholarships, expanded fellowships for research scholars, and targeted support for first-generation learners and students from underserved regions.

Multidisciplinary universities and faculty shortages

The trend of establishing large multidisciplinary higher education institutions (MHEIs) under NEP 2020 has also increased the expectations from Budget 2026. It is a general opinion that financial support is required to set up and develop such institutions, especially in areas where access to quality higher education is not available.This has also meant that there is a rising demand for qualified faculty members. Dr. Bhalla emphasized that Budget 2026 needs to fill this gap by providing new faculty positions, improved service terms, and adequate investment in faculty development. He emphasized the need for international exposure, research incentives, and constant upskilling to maintain the quality of teaching amidst the rising demand.

Private universities seek parity, infrastructure

Private universities, which are increasingly teaching a larger number of students in the country, are also waiting for the Budget to provide a clearer policy mandate. Vishal Khurma, CEO, Woxsen University, said that the vision of making India a global knowledge hub will depend on building the capacity of higher education in both public and private institutions.He called for targeted funding for faculty upskilling, doctoral training, and competitive research grants, alongside a renewed push to modernise academic infrastructure. One of his key proposals is mandating 10% of Corporate Social Responsibility (CSR) funds for state private and deemed universities operating without subsidies.“This can significantly accelerate the adoption of smart classrooms, digital libraries, AI-enabled learning platforms, and advanced laboratories,” Khurma said.He also emphasised the need for regulatory and policy parity between Indian private universities and international campuses operating in India, arguing that a level playing field is essential for competitiveness. Expanded need-based scholarships, affordable education loans, and support for first-generation learners, he added, are vital to improving access and retention.

Skills, technology, and employability

In all institutions, there is a consensus that Budget 2026 needs to focus on increasing allocations for skill development, especially in new and emerging technologies. Artificial intelligence, data science, cybersecurity, semiconductors, fintech, climate technologies, and advanced manufacturing are transforming the job market at a rapid pace.Dr. Bhalla said educational institutions need targeted funding for specialised laboratories, curriculum redesign, and industry-embedded programmes to keep pace. Khurma echoed this view, calling for incentives that promote structured industry-academia partnerships, apprenticeships, and live projects to improve graduate employability and build a future-ready workforce.

Tax reform to align with NEP 2020

Beyond funding, experts are also seeking regulatory reforms. CS Dr. Monika Goel, Executive Director & Dean Academics, and Dean, School of Commerce, Manav Rachna International Institute of Research and Studies (MRIIRS), flagged concerns over the “accreted income” tax imposed when educational institutions change their legal structure.Under Section 352 of the Income-tax Act, 2025 (corresponding to Section 115TD of the 1961 Act), institutions converting from tax-exempt to non-exempt forms face tax at the maximum marginal rate—up to 42.74%—on the fair market value of assets minus liabilities.“Such a huge liability can make institutions financially unviable,” Dr. Goel said, arguing that the provision is inconsistent with NEP 2020, which encourages institutional autonomy, new governance models, foreign university entry, and private investment.She urged the government to provide full exemption or a safe harbour for conversions and mergers, subject to conditions ensuring assets continue to be used for education.

The bigger picture: Investment in a ‘merit good’

Dr. Anjali Sane, Professor and Dean, School of Economics and Commerce, Dr. Vishwanath Karad MIT World Peace University, Pune, set these expectations in the wider economic framework. She said that education, defined as a “merit good” in economics, has a long-term influence on the productivity of a nation.While developed countries spend over 10% of GDP on education, India allocates around 4–5%. With high GDP growth, persistent digital divides, and skill mismatches among graduates, she said Budget 2026 must increase education spending, bridge access gaps, and better align learning with labour market needs to support the goal of Viksit Bharat 2047.For education sector leaders, Budget 2026 is more than just increased spending—it is about creating a system that can sustain the demographic dividend, international ambitions, and resilience of India for generations to come.