Budget 2025: 5 key expectations for the education sector

As India gears up for the Union Budget 2025, the general public eagerly anticipates significant reforms across various sectors, particularly in education. Expectations include reducing GST on education services, bridging the skill gap, boosting vocational training platforms, enhancing digital infrastructure, investing in innovation, improving teacher training, and reforming higher education and research.
Finance Minister Nirmala Sitharaman is set to present her eighth budget speech on February 1, 2025, with significant announcements expected for the education sector. In the Union Budget 2024, she emphasized the government's focus on employment, skilling, MSMEs, and the middle class for the next five years. Specifically, employment and skilling were identified as the second priority of the Modi government, with an allocation of ₹1.48 lakh crore for education, employment, and skill development.
AI Integration in Education
In March 2024, the Union Cabinet approved a ₹10,371.92 crore investment for the India Artificial Intelligence (AI) Mission to establish a robust AI ecosystem. The initiative, aligned with the vision of “Making AI in India” and “Making AI Work for India,” will be implemented by the Independent Business Division (IBD) under the Digital India Corporation (DIC). Key components include AI Compute Capacity, AI Innovation Centre, AI Datasets Platform, AI Application Development Initiative, AI FutureSkills, AI Startup Financing, and Safe & Trusted AI.
With India’s education system on the brink of a technological revolution, the Union Budget 2025 is expected to reinforce AI’s integration into learning.
Mridu Andotra, Founder & CEO of GeniusMentor, highlights that a dedicated budget allocation for AI in schools and colleges is necessary to empower India’s youth and establish the country as a global AI leader.
“A significant increase in AI funding—potentially 5-10% of the overall education budget—is required to match the ambitious goals outlined in NEP 2020. This investment should prioritize high-speed internet access, advanced digital tools, and dedicated AI labs in schools and colleges,” Andotra said.
Additionally, she emphasized that educator upskilling in AI pedagogy and hands-on AI learning experiences for students should be key priorities.
Investing in Innovation and Teacher Training
Sandeep Rai, Founder of The Circle India, an NGO focused on transforming education for underserved communities, underscored the urgent need for investments in innovation to modernize schools.
“It’s widely accepted that the traditional school system is obsolete. India must leapfrog, not just catch up, by bridging the gap between technology and education, 21st-century skills and today’s schools, and workforce needs and academia. We must create models of excellence—schools that exemplify what the future of education should be,” Rai stated.
He further stressed the importance of teacher training and leadership development, urging the government to invest in preparing educators for meaningful change.
“Leapfrogging won’t happen unless teachers and school leaders are ready, equipped, and energized to drive that transformation. This year’s budget must focus not only on capacity building but also on redefining the teacher’s role,” he added.
GST Exemption and Affordable Education for Disadvantaged Students
The financial accessibility of education is another crucial area. Prateek Maheshwari, Co-Founder of PhysicsWallah, advocates for a 100% GST exemption on educational expenses, including test-prep courses and job-oriented skill programs, for students from Below Poverty Line (BPL) and Low-Income Group (LIG) families.
“The 18% tax slab on higher and online education is excessive. Countries like Switzerland offer free education services, while China’s education tax rate is just 6%. India should take inspiration and make learning more accessible,” Maheshwari noted.
In September 2023, UGC Chairman M. Jagadesh Kumar announced the goal of increasing India’s Gross Enrollment Ratio (GER) to 50% by 2035. However, high tax rates create barriers to access, discouraging students from pursuing higher education.
In the Union Budget 2024, the government introduced financial assistance of up to ₹10 lakh for higher education through e-vouchers and a 3% interest subsidy for one lakh students annually. Maheshwari urges that the Union Budget 2025 should focus on making degrees more affordable and rationalizing student loan interest rates, including interest-free loans for economically weaker students.
Boosting Startups and Skill Development
The Union Budget 2024 introduced several initiatives for skill development, such as:
To build on these efforts, the Union Budget 2025 should prioritize tangible support for startups, including financial subsidies, grants, and incubation assistance.
Ram Ramalingam, Founder & CMO of GeniusMentor, emphasized that ed-tech startups will directly impact India’s global workforce quality.
“It’s time for the government to ‘walk the talk’ by providing tangible support—financial subsidies, grants, and incubation assistance—to startups working on next-gen technologies like AI in education,” he said.
Addressing Digital Gaps and Skill Development
Anthony Fernandes, Founder of Shaalaa.com, highlighted the need for strengthening digital infrastructure and skilling initiatives.
“The Union Budget must focus on empowering education by bridging digital gaps. A reduction in GST on education services is essential to make learning affordable for middle-class families. Additionally, targeted investments in rural internet infrastructure are critical to integrating underserved communities into the digital economy,” Fernandes stated.
He also underscored the need for vocational training platforms to address India’s growing skill gap.
“Skilling initiatives in areas like digital literacy, green energy, and logistics will boost employability and drive long-term economic growth,” he concluded.