When Finance Minister Nirmala Sitharaman presented the Union Budget 2026–27, education and skilling once again found prominent mention, reflecting both continuity and cautious evolution. Marking her ninth Budget and the Modi government’s second full fiscal roadmap of its third term, the proposals underscored a familiar ambition: aligning education with technology shifts, workforce needs, and India’s long-term growth story.

From IIT Creator Labs and a new design institute in eastern India to girls’ hostels in every district and expanded healthcare training, the scaffolding for reform is steadily being erected. The harder question, however, remains unresolved: Will rising expenditure now translate into better learning quality, teacher preparedness, and employability outcomes?

A steady rise in spending, a familiar commitment

Education spending has seen a consistent upward trajectory over the past five years. Combined allocations for school and higher education rose from ₹84,219 crore in FY21 to ₹1,28,650 crore in FY26, signalling sustained policy attention even amid fiscal constraints.

Last year’s allocation to the Ministry of Education, at approximately ₹1.28 lakh crore, marked a 6.22 per cent increase year-on-year and reinforced the government’s commitment to implementing NEP 2020. School education received its highest-ever funding, with enhanced allocations for Samagra Shiksha, PM-POSHAN, and PM-SHRI Schools. Initiatives such as BharatNet connectivity for government secondary schools and the Bharatiya Bhasha Pustak Scheme, which introduced digital textbooks in Indian languages, aimed to expand access and inclusivity.

Prof Shyam Menon, Vice Chancellor, BML Munjal University, expresses, “Budget 2026 is a decisive Yuva Shakti-driven Budget that moves India from educating for degrees to educating for jobs, creativity, and enterprise. By linking education directly to employment through the proposed Standing Committee, building university townships near industrial corridors, and investing in design and AVGC education at scale, the government is recognising youth as India’s primary growth engine. The expansion of girls’ hostels and national mental health infrastructure sends an equally strong message that access, safety, and well-being are non-negotiable for participation in STEM and higher education.”This Budget lays the foundation for a future where young Indians are not just skilled, but confident, creative, and globally competitive, Prof Menon adds further.

Higher education expansion continues

Higher education has continued its expansion, particularly across centrally funded institutions. Five IITs established after 2014 received infrastructure upgrades, while 6,500 new seats were added across the system. IIT Patna was earmarked for major development, and the PM Research Fellowship expanded its reach to 10,000 scholars at IITs and IISc.

The Budget places renewed emphasis on medical and mental healthcare education. The Finance Minister announced the establishment of three new National Institutes of Pharmaceutical Education and Research (NIPERs), along with the upgradation of seven existing institutes. To strengthen India’s clinical research ecosystem, the government will also develop a network of 1,000 accredited clinical trial sites across the country.

India today hosts 23 IITs, 21 IIMs, and 20 AIIMS, with international IIT campuses now operational in Zanzibar and Abu Dhabi, a sign of India’s growing global academic footprint. In addition, the Budget proposes the creation of seven new institutes of Ayurveda and the setting up of NIMHANS-2, signalling a parallel push towards mental health capacity-building and traditional systems of medicine.

A notable announcement last year was the establishment of a ₹500-crore Centre of Excellence in Artificial Intelligence for Education, an early signal of the government’s intent to explore AI-enabled teaching and learning.

The Union Budget 2026-27 proposed extensive support for IICT Mumbai to establish Animation, Visual Effects, Gaming, and Comics (AVGC) content creator labs in 15,000 secondary schools and 500 colleges across India. “Aligned with the highest global benchmarks of the times ahead, and poised to illuminate India’s distinctive contribution to future-ready creative and technological standards, the Finance Minister’s announcement to establish AVGC content creator labs across 15,000 secondary schools and 500 colleges marks a landmark step in shaping India’s creative economy. By introducing students early to animation, visual effects, gaming and comics, this initiative will democratise access to cutting-edge creative technologies, nurture grassroots talent, and significantly strengthen India’s global leadership in AVGC and digital storytelling,” says Dr Vishwas Deoskar, CEO, IICT Mumbai.

Dr Deoskar further added, “At IICT, we are deeply committed to building a robust, inclusive, and industry-ready creative ecosystem. We view this initiative as a powerful investment in skills, jobs, and India’s cultural and creative capital, and remain dedicated to translating this vision into sustainable, high-impact outcomes that reflect India’s commitment to global excellence.”

From the Orange Economy, AVGC and design ecosystem, Aditi Srivastava, President, Pearl Academy, shares her perspective on the Union Budget 2026, following the Finance Minister’s Budget address, “This Budget places education firmly at the heart of India’s growth strategy and recognises the transformative power of the orange economy. The focus on reviving 200 legacy industrial clusters and strengthening Khadi and handloom through the Mahatma Gandhi Gram Swaraj initiative reinforces the importance of design-led growth rooted in our cultural heritage. At a time when the Indian design industry is expanding rapidly but faces a shortage of skilled designers, the announcement of a new National Institute of Design in eastern India is timely and necessary. Equally encouraging is the push for AVGC and content creation, with creator labs in schools and colleges addressing the massive talent demand expected by 2030. Together, these measures position creativity as a core economic driver. This aligns deeply with Pearl Academy’s mission to empower students to shape the economy as globally competitive designers, thinkers, and creators.”

Medical and healthcare education: Scaling for demand

Medical education received renewed focus. The Budget proposed the addition of 10,000 medical seats this year, part of a broader plan to create 75,000 new medical seats over five years. Alongside this, three new All India Institutes of Ayurveda were announced, and training for 1.5 lakh caregivers in wellness and yoga services was proposed.

The introduction of ten new allied health disciplines, including optometry, anaesthesia, applied psychology, and behavioural health, aims to train one lakh Allied Health Professionals over the next five years. Plans to develop five medical tourism hubs signal an attempt to link healthcare education with global service opportunities.

NEP 2020: Beyond numbers

According to the Economic Survey 2025–26, education remains a core pillar of India’s growth process. Gross Enrolment Ratios stand at 90.9 per cent at the primary level and 90.3 per cent at the upper primary level, while higher education reforms are slowly reshaping academic pathways.

The Academic Bank of Credit (ABC) now covers 2,660 institutions, with IDs issued to over 4.6 crore learners, offering flexibility in academic progression. Around 153 universities have implemented bi-annual admissions, aligning with NEP’s goal of achieving a 50 per cent GER in higher education by 2035.

Yet, NEP 2020 was never meant to be a numbers-only reform. Its promise lies in multidisciplinary learning, quality teaching, and industry-oriented education—areas that require deep investment in faculty training, curriculum reform, and assessment redesign. These quieter reforms rarely make headlines but ultimately determine outcomes.

The Budget’s focus on structural reforms in the long term further strengthens the ‘Viksit Bharat’ vision, with Artificial Intelligence emerging as a key driver of India’s future growth strategy. As the economy becomes increasingly technology-led, AI is set to transform the way skills are delivered, assessed, and upgraded,expresses Prof Subir Verma, Director, FORE School of Management. Education must move from rigid, curriculum-based systems to dynamic, skills-based ecosystems aligned with evolving industry needs. AI-enabled platforms can facilitate personalised learning, continuous upskilling, and stronger academia–industry linkages. However, the adoption of AI must remain ethical, inclusive, and accessible.

Dr Madhavan Nair Rajeev, Vice Chancellor, Atria University, expresses, “The Union Budget 2026 signals a shift from incremental improvements to building a future-ready education ecosystem. By combining access measures such as girls’ hostels and content labs with world-class institutions in healthcare and vocational training, the government is connecting education more closely with industry, innovation and global standards. Initiatives like university townships and skill-focused programs demonstrate a long-term vision to nurture talent that is not just employable but capable of driving leadership, research, and entrepreneurship across sectors.”

AI, anxiety, and the future of work

As artificial intelligence reshapes industries, a growing unease is visible among students. Entry-level roles in IT, services, and media are already being automated, even as new opportunities emerge in data, design, ethics, and human–AI collaboration.

The challenge for India is not resisting technology, but preparing young people to work alongside it. Last year’s AI Centre of Excellence was an important signal. Education leaders now hope Budget 2026–27 will go further, supporting large-scale teacher training, introducing AI literacy at the school level, and incentivising industry-linked AI programmes in universities.

Without such shifts, India risks producing graduates whose degrees struggle to translate into meaningful employment. Prof Supriya Pattanayak, Vice Chancellor, Centurion University, Odisha says, The 2026 Education Budget reflects a long-term, systems-level approach to building India’s future-ready education ecosystem. The focus on expanding higher education infrastructure through university townships, strengthening medical and pharmaceutical education, and creating a national network of accredited clinical trial centres will significantly enhance India’s research and healthcare capabilities. Equally important is the emphasis on inclusion initiatives such as girls’ hostels in every district and the promotion of Indian-language digital learning will help bridge access gaps and improve participation from underserved regions. Investments in AI for schools and the expansion of Atal Tinkering Labs demonstrate a clear intent to embed technology, innovation, and problem-solving skills early in the education pipeline.

Prof Pattanayak adds further, “Together, these measures move Indian education beyond enrolment numbers towards outcomes -skilled talent, regional innovation hubs, and globally competitive institutions- positioning education as a central driver of India’s economic growth, healthcare leadership, and technological self-reliance in the years ahead.”

Adding thoughts from a school education perspective, Mahavir Goel, Chairman, Venkateshwar International School, quotes, “The Budget adopts a system-level approach to strengthening the education sector. It prioritises stronger school foundations through improved digital access, regional-language learning, and greater exposure to science and innovation. In higher education, the focus shifts towards advanced research, artificial intelligence, medical and professional training, and closer engagement with industry. By bringing schools, colleges and careers into closer alignment, the Budget positions education as a practical, outcome-driven system equipped to support India’s evolving economic and workforce needs.”

The government’s renewed emphasis on education with a strong push for skill-building, design labs, and digital innovation marks a real turning point for India’s educational and skilling landscape. We welcome this visionary approach, said Naman Jain, Education Policy Expert and Vice Chairman of Silverline Prestige School. The announcement of AVGC Content Creator Labs in 15,000 secondary schools and 500 colleges signals a commitment to moving beyond rote learning and equipping students with real-world skills that match today’s industry needs.

Skilling, services, and the employability gap

The Union Budget 2026 sharpens the government’s focus on skill-based education and workforce readiness, signalling a clear shift from degrees alone to outcomes that matter in the labour market. The announcement of five National Centres of Excellence in Skilling reflects growing concern that India’s demographic advantage can only be sustained if education translates into employability—particularly beyond elite institutions.

Yet, the disconnect between classroom learning and workplace expectations remains a persistent challenge. Stakeholders continue to flag the need for apprenticeships, micro-credentials, regional skill hubs, and large-scale teacher capacity-building, arguing that education reform can only move as fast as the educators delivering it.

One of the most consequential announcements, according to industry leaders, is the move to develop short-term modular courses in collaboration with ICAI. “This effectively turns a plain B.Com degree into a license to practice,” said Dr Nipun Sharma, CEO, TeamLease Degree Apprenticeship, calling it a major step towards closing the 47 per cent skills gap in compliance-related roles. He added that the initiative would help India’s 6.3 crore MSMEs access affordable, accredited professional support and participate more effectively in global supply chains.

The Budget’s focus on inclusion also found resonance in skilling outcomes. With a 58 per cent rise in female apprentices between 2021 and 2024, Dr Sharma noted that the ₹10,000 crore district-level girls’ hostel scheme could become a critical enabler. “By addressing the housing barrier, we can mobilise the 42 per cent of undergraduate women who currently drop out of the workforce pipeline,” he said.

Echoing this sentiment, Ranjita Raman, CEO, Jaro Education, said the Budget aligns well with India’s Viksit Bharat 2047 vision by placing industry-linked education at the centre of growth. She highlighted the proposed university townships near industrial corridors and the Education to Employment and Enterprise Standing Committee as practical, outcome-driven interventions, particularly for strengthening the services sector. The reduction of TCS on education and medical expenses from 5 per cent to 2 per cent, she added, would ease financial pressure on learners and working professionals, encouraging lifelong learning.

For the startup skilling ecosystem, the Budget’s emphasis on technology stood out. Prateek Shukla, Co-founder and CEO, Masai, described Budget 2026 as “good news for the young workforce,” noting that lower education costs come at a time when continuous upskilling is no longer optional. He pointed to the focus on AI, emerging technologies, and industry-led research as recognition of how quickly job roles are evolving. Initiatives like the Education to Employment Standing Committee, he said, finally acknowledge the long-standing gap between degrees and real-world readiness.

As India doubles down on services, technology, and high-value digital work, Budget 2026 makes one thing clear: skills, not just seats, will define the country’s growth story. The real test, however, will lie in execution—turning policy intent into pathways that consistently lead from learning to livelihoods.

New announcements: From creator labs to campus townships

The Union Budget 2026–27 unveiled a series of forward-looking interventions aimed at reshaping India’s education and research ecosystem. Among the headline initiatives is the establishment of Creator Labs at IIT Bombay, designed to provide students with access to advanced tools, mentorship, and industry-linked project spaces, fostering hands-on innovation and entrepreneurial thinking.

The government also announced plans to set up a new design institute in eastern India, addressing regional imbalances in creative education. Complementing this is the proposal to support states in developing five integrated university townships, envisioned as clusters of STEM institutions with enhanced housing, shared research facilities, and stronger industry linkages.

Social inclusion remains a central pillar of the Budget, with the announcement of one girls’ hostel in every district—a move expected to significantly improve access to education for women, particularly from underserved and remote regions.

Commenting on the broader education thrust, Dr Anshuman Jaswal, Director, NMIMS Indore Campus, noted that the Budget places strong emphasis on healthcare education and artificial intelligence. “New institutes for pharmacy, mental health, and Ayurveda, alongside AI-enabled education and skilling in areas such as sports, tourism, and education for Divyangjan, signal a diversified approach,” he said. He also highlighted plans for a National Institute of Hospitality, investments in astronomy-related research, and support for the Indian Institute of Creative Technologies to establish AV, gaming, and creative content labs across 15,000 secondary schools and 500 colleges.

However, Dr Jaswal cautioned that while these measures are significant, the moment calls for deeper investment in frontier research. He stressed the need for stronger government backing for universities working in AI, sustainability, quantum computing, robotics, space, defence technologies, drones, and deep tech, arguing that global competitiveness will depend on sustained research funding and industry collaboration.

From an economic and inclusion perspective, Dr Prabina Rajib, Director, Birla Institute of Management Technology (BIMTECH), described Budget 2026 as one that “puts real money behind real change.” She pointed to the ₹10,000 crore SME Growth Fund and the ₹2,000 crore infusion into the Self-Reliant India Fund as critical enablers for MSMEs and student-led startups, helping them scale and access export markets through logistics and SEZ-related tax support.

Initiatives such as SHE Marts and the expansion of the caregiver ecosystem are also expected to bring women-led enterprises in retail and healthcare into the mainstream. “The focus on industry-led research and training centres aligns skills with real jobs,” Dr Rajib said, adding that improvements in gender equality—particularly among rural women—suggest inclusion is beginning to move from policy intent to on-ground practice.

Together, these announcements underline a Budget that seeks to balance innovation, inclusion, and infrastructure. The challenge ahead lies in ensuring that these initiatives translate into sustained research capacity, future-ready skills, and globally competitive institutions.

Beyond education: Services, culture, and science

The Budget’s skilling vision extended beyond formal education. Professional bodies such as ICAI, ICSI, and ICMAI will develop short modular courses to strengthen business skills in tier 2 and tier 3 cities. A pilot programme to skill 10,000 tourist guides across 20 iconic destinations, in collaboration with IIMs, aims to boost service quality and local employment.

Traditional sectors were not overlooked. Initiatives such as the Natural Fibre Scheme, Textile Expansion and Employment Scheme, and National Handloom and Handicraft Programme seek to support heritage industries. Meanwhile, plans to upgrade telescope infrastructure signal renewed attention to astrophysics and advanced scientific research.

The moment of truth

Education funding has grown steadily. Now comes the more difficult phase—translating expenditure into impact. Budget 2026–27 arrives at a moment when India’s demographic advantage is still intact, but no longer guaranteed.

If the government succeeds in meaningfully linking NEP 2020, AI readiness, teacher development, and real-world skills, this Budget could shape India’s workforce for decades. If not, the risk remains familiar: rising numbers, impressive institutions, and graduates still searching for relevance in a rapidly evolving job market.