Funding Higher Education – Self Funding vs Education Loans

The Union Budget 2021-22 powered India's dream to rebuild its economy, which has been grappling against the side effects of the COVID-19 crisis. Nation's first-ever digital budget was presented by Union Finance Minister Nirmala Sitharaman at Parliament on 1st February 2021. The paperless budget reinforced the ‘Digital India Mission' by replacing the traditional briefcase with a ‘Made in India' tablet. The Budget is growth-oriented and reiterates the government's strong intent for major reforms necessary for the economic recovery of the country.

We have curated details about Budget 2021 to let you know what is in it for you.

The much anticipated ‘Never seen before' budget fared well on its promises. Here is a list of few important changes proposed in the Budget 2021:

1. Healthcare prioritized:

FM declared a major boost to India's last-mile public healthcare delivery system. She announced Rs 2,23,846 crore outlay for health and wellbeing in Budgetary Estimate (BE) 2021-22. The amount is a 137% rise compared to Rs 94,452 crore in 2020-21. It also includes Rs 35,000 crore to be utilized in the fight against COVID-19 through a nationwide vaccination drive. The FM also proposed a new centrally sponsored health scheme named PM Aatma Nirbhar Swasth Bharat Yojana. An outlay of Rs 64,180 crore will be spent on the scheme over the next 6 years. To promote insurance promotion in newer markets across the country, the foreign direct investment (FDI) limit in the said sector has been proposed to be increased to 74% in the 2021 budget.

2. Auto sector revival:

Eyeing the opportunity to improve the condition of the auto sector, the ‘Voluntary vehicle scrapping policy' was announced by FM. The policy aims at removing old polluting vehicles off the Indian roads and is being warmly welcomed by the industry. Another important announcement was the 15% increase of import duty on specific auto parts.

3. Relief to Senior citizens:

FM announced an exemption from filing income tax returns for individuals above the age of 75 years if their income is sourced through pension and interest income only.

4. Thrust to the Real estate sector:

An additional benefit of Rs 1.5 lakh tax deduction on home loan interest, until March 31, 2022, has been extended by the FM. The move would boost the residential property sector.

5. Financing for Public Infrastructure:

The capital deprived public infrastructure sector will receive its fair share as the government will set up a professionally managed Development Finance Institution (DFI). DFI will fund key infrastructure projects under the National Infrastructure Pipeline- a five-year program worth Rs 111 trillion. Capitalized by Rs 20,000 crore, it will accelerate spending on greenfield projects and benefit brownfield ones by leveraging a debt of Rs 5 lakh crore within three years.

The pandemic highlighted the need to build a self-sufficient economy empowered by digital resilience. It is imperative to enhance the digital skills of our youth and upskill our existing workforce. Here are the key takeaways from the budget for working professionals.

1. Rise in employment opportunities:

The budget emphasizes the vision of AatmaNirbhar Bharat to develop a self-reliant nation, as a roadmap to economic revival. FM announced measures to promote job creation in banking, insurance, healthcare, infrastructure, textile, and agriculture.

2. Incentivize One-Person Companies (OPCs):

To emancipate startups, non-resident Indians (NRIs), and innovators, FM proposed to incentivize the incorporation of one-person companies. The proposal will allow them “to grow without restriction on paid-up capital and turnover, allowing conversion into any other type of company at any time, reducing residency limit for an Indian citizen to set up an OPC from 182 days to 120 days.”.

3. Tax Incentives:

The tax holiday for startups has been extended by one more year so they will get capital gains exemption to 31 March 2022. The government has also extended the provision for new home loans to promote the purchase of affordable housing. Buyers opting for houses valued under 45 lakhs will get an additional deduction of Rs 1.5 lakh on the interest paid on home loans.

4. Funding for MSMEs:

The Micro, Small, and Medium Enterprises (MSME) sector was the worst hit during the pandemic. FM announced Rs. 157 billion outlay for the revival of the sector, which will be a great relief to its unorganized workforce. Along with the increase in the MSME budget, the definition of small companies under the Companies Act, 2013 has also been updated. This is predicted to be valuable for MSMEs and start-ups across various industries.

Finance Minister announced a reduction of 6.13% in the budget allocation for the Ministry of Education. A total budget of Rs 93,224 crore will be allocated for education, but there have been some major measures in the budget for new college graduates.

1. The setting up of the Higher Education Commission of India was announced in the last budget. This year Centre would implement it by introducing the legislation to set-up the Commission.
2. Central University to be set up in Leh to offer access to higher education in Ladakh.
3. The government proposes a Rs 3,000 crore outlay for providing post-education apprenticeship, training of graduates and diploma holders in Engineering. They will amend the Apprenticeship Act to realign the existing scheme of the National Apprenticeship Training Scheme (NATS). This would create more apprenticeship opportunities for the youth.
4. An initiative for collaborative Training Inter Training Programme (TITP) with Japan is also underway. It is aimed at inculcating Japanese industrial and vocational skills, techniques, and knowledge among youth to upskill them for better roles.
5. Under another initiative in collaboration with United Arab Emirates (UAE), skills and qualifications will be assessed and certified. It would also involve the deployment of a certified workforce across industries.

There hasn't been much in the budget for college students, you must plan your education and grad school budget wisely. Besides government student loans, you can download mPokket's instant loan app for students to get into the college of your dreams.