The Frozen Assets of India’s Education Budget

Education is a nation's premier capital investment. Its return is realised only when a degree translates into a pay cheque or a successful startup.

Imagine Bharath, a graduate from a middle-class Indian family. His parents spent their life savings on his degree. The government supported his journey through subsidised schooling, public university infrastructure and scholarships. Upon graduation, Bharath expected to begin earning, support his family and contribute to the national economy. Instead, he faces a bleak reality: months of fruitless job hunting.

Bharath is not an isolated case. His story exposes a structural flaw in our national balance sheet, raising a critical question: Is our massive public expenditure on education delivering real value for money, or is it merely creating a bubble of unemployable degrees?

As a Chartered Accountant, I believe public spending must be evaluated by economic outcomes, not merely budgeted outlays. Education is a nation's premier capital investment, designed to build human capital, raise productivity and drive long-term Gross Domestic Product (GDP). Yet the return on investment (ROI) is realised only when a degree translates into a pay cheque or a successful startup.

Every year, governments invest substantial public funds in schools, digital classrooms and skill-development schemes. Yet our job market reveals a severe asset-liability mismatch. While access to education has expanded, employability has stalled. According to recent MoSPI PLFS reports, overall unemployment has remained relatively stable, but youth unemployment (ages 15–29) continues to hover in the double digits, rising even higher in urban areas. Modern employers do not buy degrees; they seek data literacy, strong communication and practical problem-solving skills.

The problem is not education. It is employability.

When educated young people face prolonged unemployment or are forced to accept low-paying, low-skill jobs out of desperation, the consequences extend far beyond the individual. The effects ripple through households, businesses and the wider economy.

Household finances are among the first to come under strain. Family savings are depleted as parents and relatives continue supporting unemployed or underemployed youth. As savings diminish, household spending slows and debt rises, weakening financial resilience.

The wider economy also suffers. Young people without stable incomes cannot spend on goods and services, reducing consumer demand. Depressed domestic consumption directly affects retailers, businesses and overall economic growth.

The government incurs a double loss.

It first bears the cost of subsidising education and training, expecting that investment to create a productive workforce. When educated youth remain unemployed or underemployed, the state not only fails to realise that return but also loses the future direct and indirect tax revenues those individuals would otherwise have generated.

Accountants evaluate public spending using the three Es: Economy, Efficiency and Effectiveness. In our education system, we have largely achieved Economy by allocating funds prudently and Efficiency by expanding infrastructure and graduating students. However, we are falling short on effectiveness—ensuring graduates are equipped to generate tangible economic value.

We are measuring inputs, not outcomes.

Addressing this crisis requires urgent structural reforms that better align education with employment. Incremental changes will not be enough; academic institutions, industry and government must work together to bridge the gap between classrooms and careers.

Industry-backed curricula should replace outdated, theory-heavy models that no longer reflect workplace realities. Educational institutions must work closely with employers to keep courses relevant, while corporate-sponsored internships and practical apprenticeships should become an integral part of every student's learning.

Vocational education and financial literacy must receive far greater emphasis. Technical trades should enjoy the same social and economic status as traditional university degrees, recognising that skilled trades are essential to economic growth and offer rewarding career paths.

Companies should also be encouraged to invest in workforce development through targeted tax incentives. Tax breaks for businesses that run structured training and employment programmes for fresh graduates would help bridge the transition from education to employment. They would also create a stronger pipeline of job-ready talent.

Education cannot exist in a silo. Financial sustainability is achieved when public investment in education directly fuels private-sector growth. Matching our youth's potential with real market opportunities is not just good social policy—it is sound, non-negotiable financial management.

(The writer is a Chartered Accountant based in Thane. Views personal.)