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BW Businessworld

'Give Fiscal Incentive To Set Up Vocational Institutions'

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Encouraging and facilitating private sector participation in the formal school and higher education sector is a key challenge, says Dhiraj Mathur, Executive Director, PricewaterhouseCoopers Pvt Ltd to Rozelle Laha of BW| Businessworld. Regulatory ambiguity and the absence of a legal framework for foreign educational institutes to set up institutes in India are also ailing the sector.

What are the key points for you in the education budget?
Increase government spending on education which is currently below 4 per cent of GDP. Developed countries on an average spend 4 to 6 percent of GDP on promoting education and building necessary infrastructure around it. India’s education sector needs both - an increase in number of schools and universities and improved infrastructure, including availability of trained and experienced faculty. The government should also encourage greater private sector participation and the use of information technology in schools and colleges to improve the access and quality.

Could you please highlight some key areas in education that the new budget should emphasize upon?
Key thrust areas in this budget should be -
  • An increase in the budgetary allocation for education sector
  • Easing regulatory constrains including passage of Foreign Educational Institutions (Regulation of Entry and Operations) Bill, 2010
  • Tax break and incentive for participation in the education sector including fiscal incentive for setting up vocational and skill development institutions
  • The government should provide infrastructure status to education
  • Individual taxation benefits on the principal amount of educational loans repaid in the year, on similar lines as is done in housing loans
What is your take on the fiscal policy of the new government in the sector?
Increasing spending on education to 6 per cent of GDP will play a significant role in making India a knowledge economy. The education sector is very critical in realizing the demographic dividend for India as 54 percent of our population is under the age of 25. Being associated with skill growth, higher productivity and enhanced human capacity, education is a very important tool to improve the quality of life. Efforts should be made towards increasing the gross enrolment ratio from current level of 18 per cent to 30 per cent by 2020. To raise gross enrolment ratio, education sector should be given infrastructure status. Education companies should be allowed tax exemptions in line with those enjoyed by IT companies.