Background :
1) A few days before India celebrated the 75th year of Independence, Union Minister of Education said in reply to a debate in the Lok Sabha that people should let go of the idea that universities must be funded only by the government.
2) His remarks are only a corollary to the General Financial Rules of 2017, which encourage all autonomous bodies to maximise generation of internal resources and attain self-sufficiency (Rule 229(iv)).
Still, the Minister’s remarks shocked many, for only a week earlier, while launching education and skill development-related initiatives to mark two years of the launch of the National Education Policy (NEP), Home Minister had said that the public education system is the basis of a vibrant democratic society.
The National Education Policy’s vision
The NEP 2020 envisaged that it would “promote increased access, equity, and inclusion through a range of measures, including greater opportunities for outstanding public education.”
It also provided an assurance that the autonomy of public institutions would be backed by adequate public funding.
The NEP noted that public expenditure on education in India was nowhere close to the 6% of GDP envisaged by the 1968 policy, reiterated in the 1986 policy, and reaffirmed in the 1992 review of the policy.
Against this backdrop, it was gratifying that the 2020 policy endorsed a substantial increase in public investment by the Central and State governments to reach 6% of GDP at the earliest.
Elaborating on the reasons, NEP 2020 said this level of public funding was “extremely critical for achieving the high-quality and equitable public education system that is truly needed for India’s future economic, social, cultural, intellectual progress and growth.”
Going by the National Education Commission, also known as the Kothari Commission, which was the precursor to the 1968 policy, higher education should have been getting at least 2% of GDP.
In contrast, the expenditure on higher education by the Centre and the States taken together nosedived from 0.86% of GDP in 2010-11 to a measly 0.52% in 2019-20 (Budge Estimates, or BE).
It is disquieting that the Centre’s expenditure on higher education dropped from 0.33% of GDP in 2010-11 to a mere 0.16% in 2019-20 (BE).
The decline in public investment in higher education does not appear due to the fall in the receipts of the Central government. The revenue receipt of the Union government went up three times from ₹7.51 lakh crore in 2011-12 to ₹22.04 lakh crore in 2022-23 (BE).
So have total receipts, from ₹13.07 lakh crores in 2011-12 to ₹39.44 lakh crore in 2022-23 (BE).
As a percentage of the total receipt, the allocation for higher education fell from 1.49% to 1.04% during the corresponding period.
Consequence of privitisation
Higher education in India is already highly privatised. Most private higher education institutions are run on a self-financed basis, a euphemism for full cost-recovering institutions.
Besides, private tendencies have also penetrated deeply into public higher education. The most obvious consequence would be a substantial increase in fees and other charges from students. The idea that higher education could be funded fully by the students or their parents out of their savings or through bank borrowings appears grossly misplaced in the Indian context.
The NEP 2020 envisages enrolment in higher education to double by 2035. Considering the fact that the social and economic elites, the rich and the affluent, have already crossed a gross enrolment ratio of 100%, the future growth in higher education has to come from the socio-economically disadvantaged groups.
Would these people be able to afford full-cost recovery from their higher education institutions?
Disputes about the levels of poverty apart, it is now a reality that 62.5% of our population have to be provided free ration to save them from destitution.
No nation would want to deprive such a vast section of accessing higher education. Higher education in India may have had its failings, but it has served the nation rather well.
It has played a critical role in sustaining the $2.8 trillion economy that India has become today. But for enhanced investment in higher education, our vision of a $5 trillion economy and the aspiration of becoming a high-income developed country could be jeopardised.
Higher education cannot be a luxury reserved just for a privileged few. It is an economic necessity for every family. And every family should be able to afford it
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.