Budget 2026-27 expectation: Education to be India’s strategic economic lever

As the countdown to the Union Budget 2026-27 begins, the Indian education sector finds itself at a pivotal crossroads. No longer viewed as merely a "social sector" expense, education is increasingly being recognised as the primary engine for India’s ambitious "Viksit Bharat" vision.

With the National Education Policy (NEP) 2020 entering its sixth year of implementation, the industry's focus has shifted from expanding access to ensuring high-impact outcomes through research, design, and deep industry integration.

Repositioning for Research and Innovation

The demand for a more robust research ecosystem has never been louder. While the 2025 Budget introduced the National Research Foundation (ANRF) and increased fellowships under PMRF 2.0, academia is calling for a more direct infusion of capital into universities to bridge the gap between theoretical knowledge and real-world application.

Dr. Yajulu Medury, Vice Chancellor, Mahindra University, emphasises that the current phase of the NEP requires a significant fiscal push to transform institutional identities.

“With the Indian higher education system re-positioning itself in sync with NEP 2020, we anticipate an increased allocation of funds in Union Budget 2026 to make universities centres of advanced research and innovation,” says Dr. Medury. “This should translate to increased investment in emerging areas to foster holistic development and to facilitate better synergy between industry and academia.”

This synergy is critical as India navigates the Fourth Industrial Revolution. It has been argued that without dedicated funding for "Last-Mile Skilling" and industry-linked laboratories, the rising employability rates, currently hovering around 56%, will struggle to reach the levels needed for global competitiveness.

Design: The new strategic asset

One of the significant expectation from this year's pre-budget discourse is the elevation of "Design" from an aesthetic elective to a strategic economic pillar. With the global creative economy projected to reach USD 480 billion by 2027, India is looking to move beyond its reputation as a cost-competitive service provider to becoming a high-value innovation hub.

Dr. Sanjay Gupta, Vice Chancellor, World University of Design, argues that the budget must reflect this evolution by supporting interdisciplinary models that blend creativity with technology.

“As India prepares for Budget 2026, my expectation would be for the higher education sector to be seen not merely as a social sector but as a strategic economic investment,” observes Dr. Gupta. “The next phase of India’s growth will be driven by innovation, advanced manufacturing, creative industries and digital transformation. All of these depend on strong design and interdisciplinary education. We hope to see dedicated funding for design-led R&D, creative-technology labs, and industry-linked universities that translate knowledge into products, services and cultural exports.”

Dr. Gupta further notes that supporting institutions that integrate design, technology, sustainability, and entrepreneurship is the key to helping India "move from being a cost-competitive economy to a globally competitive innovation economy."

Key fiscal pillars for 2026-27

Beyond these expert perspectives, the industry is coalescing around four critical expectations for the Finance Minister:

• The 6% GDP roadmap: Despite years of advocacy, public spending on education remains near 4.1-4.6% of GDP. Now there is an expectation for a definitive timeline to reach the 6% target promised by the NEP.

• Digital infrastructure 2.0: While 65% of schools now have computer access, the focus is shifting to the "full stack", broadband, affordable devices, and teacher readiness, especially in rural districts.

• Tax rationalisation: There is a growing plea to lower the 18% GST on paper for textbooks and digital learning tools, making quality education more affordable for the middle class.

• Regulatory autonomy: Industry bodies are pushing for a "principle-based" governance model for bodies like the UGC and AICTE, allowing institutions more freedom to innovate their curricula in response to market shifts.

The road ahead

As the budget approaches, the consensus among academic leaders is clear: the government must treat education funding as "infrastructure" rather than "expenditure." By backing research-intensive universities and design-led innovation, Budget 2026-27 has the potential to turn India’s demographic dividend into a sustainable economic powerhouse.