Finance Minister Nirmala Sitharaman unveiled a youth-centric Union Budget 2026-27 on Sunday, February 1, delivering a significant boost to India’s education and skilling sectors. With a total allocation of ₹1,39,289.48 crore for the Ministry of Education—an 8.27% increase over the previous year—the government has signaled a decisive shift toward “Outcome-Based Learning” and “Viksit Bharat 2047” goals. The budget addresses long-standing industry demands for digital infrastructure, AI integration, and employability, reinforcing education as a core pillar of human capital.

Record Funding and Infrastructure Expansion

The 2026 Budget restores momentum in public spending, with a sharp focus on bridging the urban-rural divide and supporting female students in STEM.

• School Education: The Department of School Education and Literacy received its highest-ever allocation of ₹83,562 crore.
• Higher Education: Allotted ₹55,727 crore, including significant hikes for IITs (₹12,123 crore) and NITs (₹6,260 crore).
• Empowering Women: To support female students in higher education, the government will establish one girls’ hostel in every district through Viability Gap Funding (VGF).
• New Institutions: The FM proposed three new NIPERs (Pharmacy), a new National Institute of Design (NID) in Eastern India, and five university townships near major industrial corridors to foster industry-academia synergy.

The “AI Imperative” and Skilling 2.0

Recognizing the disruptive potential of Artificial Intelligence, Budget 2026 introduces several first-of-their-kind initiatives to make the Indian workforce future-ready:

• AI Content Labs: In a massive scale-up, AVGC (Animation, Visual Effects, Gaming, and Comics) Content Creator Labs will be set up in 15,000 secondary schools and 500 colleges.
• AI for Education: An allocation of ₹100 crore has been set aside specifically for Centres of Excellence in AI for Education, while the National Mission in Education through ICT received ₹650 crore.
• Apprenticeship & Jobs: The National Apprenticeship Training Scheme (NATS) saw a 6% hike to ₹1,250 crore, aimed at tackling the employablity gap where currently only 51-56% of graduates are industry-ready.
• Education to Employment Standing Committee: A high-powered committee has been formed to align curricula with emerging technologies and ensure graduates don’t possess “anxious” degrees in an automated world.

While the industry lauded the infra push, leaders like PhysicsWallah’s Prateek Maheshwari and upGrad’s Ronnie Screwvala had mixed reactions. The long-standing demand to reduce the 18% GST on edtech services to 5% remained unaddressed in this speech, though the focus on digital learning infrastructure and teacher capacity building was widely welcomed as a step toward “Learning Excellence” over simple “Enrolment.”

Key Highlights:

• Budget Surge: The Ministry of Education’s budget rose 8.27% to ₹1.39 lakh crore, with the highest-ever funding for school education (₹83,562 cr).
• AI & Tech Integration: Government to set up AVGC labs in 15,000 schools and new Centres of Excellence for AI to ensure students are “AI-literate.”
• Gender & Access: One girls’ hostel per district and five new university townships planned to improve accessibility and research depth.
• Employability Focus: A new ‘Education to Employment’ Standing Committee will tackle the skill gap, with NATS funding increased to ₹1,250 crore.