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Union Budget 2025: Strengthening India’s Higher Education

Higher Education

Union Budget 2025: Strengthening India’s Higher Education

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India has long faced lingering problems in its higher education system. The Union Budget 2025 provides an opportune moment for reforming India’s higher education system, which desperately requires both reforms and investments to make it a global hub for innovation, research, and learning. As of 2025, over 8,00,000 Indian students are expected to travel abroad in search of quality higher education- an outflow of up to $70 billion from Indian households. This creates a need to create world-class institutions within the country, of quality that the best in this world can have.

India’s GER in higher education is only 27%. It is woefully short of the NEP 2020 goal of achieving 50% GER by 2035. There is, therefore, an urgent need to substantially increase the budgetary provisions for the higher education sector to make it a strong performer, focusing on expanding access, equity, and excellence. Public institutions, which make up the backboned higher education system of the country, are often trapped in a vicious over-reliance on government funding. This dependency hampers their autonomy and scalability. For the government to reach the GER target, it must ensure that its funding priorities are closely aligned with both enrollment and quality targets. Allow institutions to scale and improve their offerings.

The most important issue in the higher education landscape of India is the continued brain drain, as thousands of students seek education abroad because of the perceived scarcity of quality education in India. The only way to reverse this trend is to bring Indian institutions up to global standards. A major step in this direction would be to grant autonomy to institutions in matters of recruitment, administration, and curriculum design. Moreover, supporting Indian universities in developing campuses overseas can also ensure the retention of students who would otherwise opt for study abroad.

Performance-based funding models, based on enrolment, research, and innovation output, can be more effective to boost performance; thus, institutions will be more competitive at the world level.

Transformation of India’s higher education system also needs the development of a strong research culture. Many top universities worldwide generate up to 25% of their revenue from research-related overheads. For India to compete globally, its institutions must receive substantial research grants, particularly those with provisions for overhead costs. These policies should aim at encouraging philanthropy as means by offering tax incentives to donors and even strategies for endowments building-inn accordance with Ivy League universities in the United States. This, of course, will not only aid in research capabilities but also provide a sustainable financial model that allows institutions to grow and innovate further.

Quality of faculty is also an important aspect in forming the educational experience. Currently, the gap between the elite institutions and tier-II colleges is quite wide in terms of faculty quality and recruitment practices. Faculty recruitment in tier-II institutions is usually marked by delays, litigation, and low standards. A national pool of highly qualified faculty must be created with centrally recruited and well-compensated professors to teach in tier-II colleges. Ensuring high standards for faculty across all institutions will improve the overall quality of education and encourage a culture of excellence that will benefit students all over India.

The governance structure at higher education institutions also needs immediate reform. Bureaucratic interference severely hampers the autonomy of institutions and their innovation and growth capabilities. The reforms envisioned under NEP 2020, with its diverse emphasis on empowerment of boards for financial, academic, and administrative decisions, are crucial. The reform will give institutions more freedom to add diversity in a better quality and stay ahead of the global education curve.

Furthermore, both public and private institutions in India must diversify their revenue streams to reduce dependence on government funding. Outcome-linked financial models can be introduced, with grants tied to measurable outcomes such as research productivity, patents, and industry collaborations. This would incentivize institutions to focus on delivering results that have a tangible impact on society. This would include the introduction of income-contingent loan schemes, such as Australia’s Higher Education Loan Program (HELP), which would make higher education accessible without burdening students with the immediate financial burden.

High-stakes entrance exams like NEET and JEE have further nurtured a culture of stress and inequity, exacerbating the challenges to mental health among students. Broader reform in the entrance examination system coupled with efforts at counseling will ensure that the student population that steps into the reckoning is mentally strong as well as academically balanced.

A much-needed comprehensive overhaul that focuses on inclusivity, innovation, and global competitiveness can make India an education leader in the world. The Union Budget 2025 will be the right time to start building such an education system that not only retains the best talent but empowers students for success in the increasingly competitive world. If India attends to the four theses on access, research, faculty quality, and governance, then a long way toward creating one of the world’s best education systems with successful innovation, economic growth, and societal progress will have been covered.

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