Union finance minister Nirmala Sitharaman on Sunday announced the setting up of a new National Institute of Design (NID) in eastern India, five university townships near industrial corridors, and a reduction in the Tax Collected at Source (TCS) under the Liberalised Remittance Scheme (LRS) for education abroad from 5% to 2% to make it easier for Indian families to fund overseas studies of their children.
Sitharaman said that the budget was focused on “AI application” and a “Yuva Shakti (youth power-driven)” one. She shared the government’s plans to boost employment and fulfil the aspirations of the youth.
She proposed a high-powered standing committee on ‘Education to Employment and Enterprises,’ which will recommend measures on the services sector.
“This will make us a global leader in services with a 10% global share by 2047,” Sitharaman said, adding that the panel will prioritise areas to optimise growth potential, employment, and exports. She added that the panel will assess how AI and other emerging technologies impact jobs and recommend measures for skill requirements.
The terms of reference of the high-level education-to-employment and enterprise standing committee include identifying high-growth services sub-sectors with strong employment and export potential and addressing sector-specific gaps. The committee will examine cross-sectoral policy and regulatory issues, including standards-setting and accreditation, and explore opportunities to expand services exports.
It will assess the impact of emerging technologies, including AI, on jobs and skill requirements and propose measures to integrate AI into education curricula from the school level, alongside upgrading the State Council of Educational Research and Training (SCERTs) for teacher training. The committee will also recommend upskilling and reskilling technology professionals and engineers in AI and other emerging technologies.
Further, it will suggest AI-enabled mechanisms to better match workers with jobs and training opportunities, propose steps to make informal work more visible, verifiable, and future-ready to improve upward mobility, and outline measures to attract skilled diaspora and foreign talent to India.
Union education minister Dharmendra Pradhan said the committee will suggest reforms in education aligned with the goal of Viksit Bharat (developed India), focusing on technology-driven and AI-enabled school education, with institutions like SCERT playing a key role in building a new “knowledge-based education ecosystem.”
To address the shortage of designers in India’s expanding design industry, Sitharaman proposed to establish a new NID to “boost design education and development in the eastern region of India.” There are seven NIDs in India, recognised as Institutes of National Importance.
She also said the Union government will support states in creating five university townships in the vicinity of industrial and logistics corridors. “These planned academic zones will host multiple universities, colleges, research institutions, skill centres, and residential complexes.”
Prof V Ramgopal Rao, group vice chancellor, BITS Pilani, said the proposed ‘Education to Employment and Enterprise’ standing committee, coupled with the creation of university townships with shared research infrastructure, “can be a decisive step, provided it translates into sustained funding, high-quality faculty development, and genuine institutional autonomy.”
“If we want to meaningfully reduce the outflow of talented students, we must expand capacity without diluting standards, and ensure that world-class teaching and research pathways are available within India,” he added.
The Union ministry of education’s allocation increased from ₹1.28 lakh crore in the 2025–26 budget estimate (BE) to ₹1.39 lakh crore in the 2026–27, an 8.27% rise.
The budget for the department of school education and literacy (DoSEL) rose from ₹0.79 lakh crore in 2025–26 to ₹0.84 lakh crore in 2026–27, a 6.35% increase, while the allocation for the department of higher education (DoHE) went up from ₹0.50 lakh crore in 2025–26 to ₹0.56 lakh crore in 2026–27, marking an 11.28% rise.
Pradhan said the 8.27% rise in budget allocation for the education ministry “clearly reflects the government’s priority for education.” Pradhan highlighted that the allocation for the National Council of Educational Research and Training (NCERT) was increased by 14% from ₹593.71 crore in 2025-26 crore to ₹681.79 crore in 2026-27 to “accelerate curriculum and assessment reforms under the National Education Policy (NEP).”
The Indian Institutes of Information Technology (IIIT) saw a 15.6% budget cut, with its allocation falling from ₹522.20 crore in 2025–26 to ₹441 crore in 2026–27. The Indian Institute of Science (IISc) also saw a reduction of 6.1%, as its budget declined from ₹900 crore to ₹845 crore.
The Central Institute of Indian Languages (CIIL), Mysuru, which leads several flagship schemes for the promotion of Indian languages, witnessed a 9.8% cut. Similarly, funding for the Indian Knowledge System (IKS) initiative dropped sharply by 30%, from ₹50 crore in 2025–26 to ₹35 crore in 2026–27.
The Rashtriya Uchhatar Shiksha Abhiyan (RUSA), now called PM-USHA, which supports state universities to implement NEP 2020 reforms, received a marginal increase to ₹1,850 crore in 2026–27 from ₹1,815 crore a year earlier.
Sitharaman also announced that TCS under LRS for education abroad will be reduced from 5% to 2%.
“This will make higher education, advanced research, and postdoctoral studies overseas more accessible to Indian students. It will ease the financial burden on students and families,” Pradhan said.
Sitharaman said that to promote astrophysics and astronomy via immersive experiences, four telescope Infrastructure facilities will be set up or upgraded -the National Large Solar Telescope (NLST), the National Large Optical Infrared Telescope (NLOIT), the Himalayan Chandra Telescope, and the COSMOS2 Planetarium.
“This is very thrilling news for the optical astronomy community in India, who have been waiting for many years for international-level facilities, particularly the NLST and NLOIT in Ladakh. We have been doing a lot of our science in collaboration using telescopes on foreign soil, and we are very capable of building our own facilities in Ladakh,” said astrophysicist and Ashoka University vice chancellor Somak Raychaudhury.
The Union ministry of skill development and education budget rose from ₹6100 crore to ₹9,885.80 crore—an increase of over 62%. “This unprecedented expansion will accelerate capacity building, industry-aligned training and future-ready skills, empowering India’s youth to lead the next phase of economic transformation,” MSDE said.
