Union Minister of Finance Nirmala Sitharaman announced in her Budget Speech for FY 2024-25 that those who are not benefiting from any scheme will be given loans of up to Rs 10 lakh to pursue higher education in domestic institutions.
This will be provided through e-vouchers given directly to 100,000 students each year. The students can avail of the loan on an annual interest subvention of 3 per cent of the loan amount.
She also mentioned that the model skill loan scheme will be revised under which students can get a collateral-free loan of Rs 7.5 lakh backed by a guarantee of a government-promoted fund. This is intended to help 25,000 students every year.
Sitharaman allocated Rs 1.48 lakh crore for education, employment and skilling. She added that courses will be designed in a way so that they are aligned with the needs of the industry, adding that new courses will also be introduced. This is important as employers have said that though there is a need for young graduates to fill up positions, most fresh graduates are not employable. In the Economic Survey, Sitharaman also mentioned that only 51 per cent of graduates were employable.
What Experts Say
According to many experts, the government is following a two-pronged approach aimed at improving the skills sets of employees, while also incentivising employers.
Says Krishnendu Chatterjee, vice president and business head, TeamLease Services: “The government’s commitment to employment and employability is clear with its decision to provision Rs 1.48 lakh crore for this initiative. This initiative, based on the Employees’ Provident Fund Organisation (EPFO) enrolment, focuses on recognising first-time employees and includes direct benefit transfers of the first month’s salary in three instalments for salaries up to Rs 1 lakh. Special emphasis is placed on the industrial and manufacturing sectors. Additionally, employers will receive incentives for job creation, with the government reimbursing up to Rs 3,000 per month for two years towards EPFO contributions for each new employee.”
Aman Dhall, former India alumni ambassador and alumni advisory board member, Loughborough University, explains that in India, education loan interest rates range from 8.5-16 per cent. A three per cent interest subvention for students is a positive measure to enhance access to higher education.
“However, with education fees rising, the current cap of Rs 10 lakh for this discount needs reassessment. For instance, a B.Tech course at BITS Pilani can cost in the range of Rs 25 lakh to 30 lakh, excluding living expenses, while an MBA from IIM-Ahmedabad costs nearly Rs 25 lakh,” adds Dhall.
