Highlights Centre and states together spend around 4% of GDP on education, lower than the recommended 6%. At the primary school level, learning outcomes continue to be poor, 8% students drop out at the secondary level.  Enrolment in private schools is increasing. Contribution of HEIs in research and development is low.  On average, 50% of funds for research and innovation are utilised annually.

Announcements in budget speech 2026-27 Five university townships will be established in the industrial and logistic corridors. Support will be provided to the Indian Institute of Creative Technologies, Mumbai to establish gaming and content creator laboratories in 15,000 secondary schools and 500 colleges.

Education is listed in the Concurrent List of the Constitution.[i]  This means that education is a shared responsibility of both the Centre and states.  The Centre is responsible for determining the standards of higher education institutions (HEIs).[ii]  States are responsible for development of school and higher education. 

The National Education Policy, 2020 guides the overall development and direction of the education sector in the country.[iii]  Some of its key features include: (i) universal access to school education from pre-primary to grade 12, (ii) including vocational education in mainstream education, and (iii) establishing multidisciplinary research universities.3

The Union Ministry of Education is responsible for formulating national policies and schemes on education.  At the school education level, the Ministry funds the Samagra Shiksha scheme, the mid-day meal scheme (PM POSHAN), and some schools such as Kendriya Vidyalayas and Navodaya Vidyalayas.  With respect to higher education, the Ministry funds autonomous bodies like IITs, NITs, central universities, and gives grants to universities through UGC.

This note examines the allocation to the Ministry of Education in 2026-27.  This includes allocations to the Department of School Education and the Department of Higher Education.  The note also highlights some of the key challenges in the sector. 

Overview of finances

The Ministry has been allocated Rs 1,39,289 crore for the year 2026-27.[iv]  This is 14% higher than the revised estimates of 2025-26.  The Department of School Education and Literacy has been allocated Rs 83,562 crore (60% of the Ministry’s budget), and Department of Higher Education has been allocated Rs 55,727 crore (40% of the Ministry’s budget).[v][vi]  See Table 1 for share of allocation to the respective departments.

Table 1:  Expenditure of Ministry of Education (in Rs crore)

Departments	2024-25 Actuals	2025-26 Revised	2026-27 Budget	Change from 25-26 RE to 26-27 BE
School Education	65,159	70,567	83,562	18%
Higher Education	45,577	51,382	55,727	8%
Total	1,10,736	1,21,949	1,39,289	14%

Note:  BE is Budget Estimates and RE is Revised Estimates.
Sources:  Demand No. 25 and 26, Expenditure Budget 2026-27; PRS.

Expenditure and allocation

Between 2017-18 and 2026-27, the Ministry’s expenditure grew at a compounded annual growth rate (CAGR) of 5%.  The Standing Committee on Education (2025) recommended that the allocation to the Ministry must be increased between 8% and 10% of allocation made in the previous year.[vii]  This will ensure that the Departments keep up with inflation trends.7

As per the revised estimates of 2025-26, around 95% of the funds allocated will be utilised.  The Standing Committee (2025) had noted that until February 2025, the department of school education had utilised around 59% of the allocated funds.7  The remaining funds would have to be utilised within the last two months of the financial year.  It recommended that expenditure in the last quarter must be limited to 33% of the allocation.  Not more than 15% of the allocation must be spent in the last month of the financial year.7

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