Union Budget 2021: Measures for Human Capital

Human capital was one of the primary focus areas of the Union Budget 2021. Responding to the economic setback caused by the pandemic, the Finance Minister announced several measures related to education and skilling as well as some initiatives for gig workers. Let us dive into the specifics.


Finance Minister Nirmala Sitharaman announced a range of initiatives to help Indians tide over the economic challenges posed by COVID-19. “As India continues to fight and the world changes, India is well-poised to truly be the land of promise and hope,” she said in her budget speech. She followed up with announcements of setting up a Higher Education Commission, along with other proposals like amending the Apprenticeship Act, and launching a portal for gig workers.

The plan is to provide skill training to Indian graduates in collaboration with Japan and to benchmark the qualifications, certifications, etc. with the UAE. Furthermore, building and construction workers and other on-call labourers would be covered under social security benefits for the first time.

Some industry experts felt that the budget did not address the needs of the EdTech sector, which has become a lifeline for promoting blended learning models across the country. Others believed that the skilling industry did not receive the due. So, here are the views on either side.

Steps improve employability quotient:

School and education infrastructure received a significant lift as the government is focused on setting up 15,000 model schools. The FM reiterated that these exemplary institutions would be strengthened in line with all the components of the National Education Policy (NEP) 2020. This step would go a long way in channelizing India’s energy and resources towards quality education.

Another laudable endeavour highlighted in the budget speech was the formalization of an umbrella structure for all government colleges, universities, and research bodies. The government will offer a ‘Glue Grant’ to implement the same in 9 cities. The HEC would go a long way in creating a greater synergy across higher education efforts in India. Dinesh Sharma, Deputy Chief Minister of Uttar Pradesh, echoed a similar sentiment. “The budget aimed at a self-reliant India with higher education getting a boost,” he said in a statement.

As regards skilling, the changes in the Apprenticeship Act will enhance learning opportunities and employability of students. Expanding collaboration with foreign countries is a positive step as it will bring uniformity and industry-relevance to the outcomes.

Moreover, the new changes for ‘gig and platform’ workers mean that the support schemes (minimum wage, health, housing, insurance credits, etc.) would now be applicable to all those covered under the Employees State Insurance Act. This includes migrant labourers, construction staff, and women in the informal sector.

Therefore, the budget covered all major components of creating an equitable and sustainable workforce.

Steps are not sufficient:

The budget ignored the “digital infrastructure” aspect of the education system, which is a necessity in the pandemic world. If we are to move forward with “hybrid” approaches to navigate the new normal, we need investment in online services. Industry leaders are of the view that the GST on EdTech companies should have been reduced from 18 percent to 5 percent. This sector is performing the enormous task of educating the next generation, so the oversight was a huge disappointment.

Critics point out that the FM’s budget speech merely reiterated legislation, such as  skilling partnerships and extending social security to the gig economy. Unless these announcements are connected to skilling or benefit funds, they will not have any budgetary significance. Additionally, it is unclear whether the government has allocated any funds for supporting the electronic system of labor administration.

The measures in the higher education sector and apprenticeship training schemes may not be enough to support young India, which has 600 million people aged under 25 years. Considering the size of this future workforce, one can ask: Would the ₹3000-odd crore allocation for the skill development ministry suffice?

The budget should have been more respectful of the current situation and the pressures under which the education, skilling, and job sectors are reeling. Without proper funding, the budget runs the risk of becoming a series of platitudes.