Financing of School Education in India: Trends and Composition

Abstract

This study examines the financing structure of school education in India from 2007–08 to 2024–25. The study focuses on the changing comparative roles of state governments, the central government, and private households. School education is the basis of human capital formation and a major component of access to higher education, productivity, employment, social mobility, and broad development. The study is based on data from the Unified District Information System for Education Plus (UDISE+), the Analysis of Budgeted Expenditure on Education (ABEE), and nationally representative household surveys conducted by the National Sample Survey Office/National Statistical Office, including the 64th, 71st, and 75th rounds and the Comprehensive Modular Survey: Education. Data for household expenditure for non-survey years are calculated through interpolation and extrapolation, while data on public expenditure for the latest years are estimated using observed growth rates. The results have been analysed in absolute terms, as a percentage of GDP, and by the relative contributions of different financing sources.

The study shows that total expenditure on elementary education rose from ₹98,597 crore in 2007–08 to ₹873,277 crore in 2024–25, while public expenditure grew from ₹69,526 crore to ₹648,451 crore. Private household expenditure also rose from ₹29,071 crore to ₹224,826 crore. The public sector remained the dominant source of financing for school education in India, rising from 71 per cent to 74 per cent, while the household share fell from 29 per cent to 26 per cent. State governments remained the principal financing agents, accounting for 56 per cent of total elementary education expenditure in 2024–25, compared with 19 per cent for the central government. Total elementary education expenditure increased from 2.01 per cent to 2.64 per cent of GDP over the period.

The findings show a gradual strengthening of public financing, yet household expenditure is still a considerable share of school education finance. The findings show that public and private financing have expanded simultaneously rather than showing a simple substitution relationship. The continued household contribution also elicits concerns about affordability and equity, particularly across socio-economic groups. The study determines that strengthening public investment, particularly through adequate state financing and effective centre–state fiscal support, remains important for improving the adequacy, sustainability, and equity of school education financing in India.