Budget funds development of five large university clusters

The government’s increased annual national budget allocation to higher education includes a plan to set up large university clusters, as well as targeted funding for its research chair programme, centres of excellence in AI and world-class institutions.

Presented on 1 February, India’s annual budget places higher education at the heart of India's economic, technological, and knowledge-driven development strategy, with the government signalling that it wants India to emerge as a global hub for competitive universities and research institutions rather than serve only as a source of students for overseas markets.

This ambition is reflected, inter alia, in higher spending on education, including higher education, a proposal for the development of five large “University Townships” or clusters, and financial relief to students studying abroad.

“The budget provides a strong blueprint for strengthening India's higher education and research ecosystem in line with the vision of Viksit Bharat (Developed India),” Union Minister of Education Dharmendra Pradhan said in a statement.

Higher education received an allocation of INR557.3 billion (around US$6.6 billion), up from about INR500.8 billion (approximately US$6.1 billion) the previous year – an increase of nearly 11%.

The budget also earmarked targeted funding for higher education and research.

The PM-One Nation One Subscription (PM-ONOS) scheme giving free access for students and academics to top-tier journals received INR22.0 billion (around US$261 million) in 2026 and 2027.

The newly launched PM Research Chair programme was allotted INR2.0 billion (about US$24 million) to support dedicated research chairs at leading institutions.

A further INR1.0 billion (US$12 million) was allocated for new Centres of Excellence in Artificial Intelligence for Education, a new scheme that aims to integrate AI into teaching, learning, assessment and academic administration.

In addition, INR2.5 billion (around US$30 million) was allocated to a flagship research and development-focused scheme to be used to establish three new AI Centres of Excellence in that scheme.

Meanwhile, funding for World Class Institutions rose to INR9.0 billion (around US$109 million), up nearly INR4.25 billion (about US$51 million) year on year.

Boost to HE, research ecosystem

The government argues that this investment will prepare India's young population to acquire global skills and enhance research competitiveness.

“The proposal to establish five University Townships along major industrial and logistics corridors will create integrated academic hubs with strong linkages between universities, research institutions, skills centres and industry,” Pradhan said.

“Alongside this, the focus on education-to-employment pathways, emerging technologies such as AI, and enhanced support for research and innovation will help build future-ready institutions and empower India’s youth,” he added.

However, despite the funding increase, experts believe that India's public spending on education remains relatively low as a share of GDP, falling short of the 6% target (for all levels) recommended under the National Education Policy.

According to UNESCO data, India’s total government expenditure on education has broadly ranged between about 4.1% and 4.6% of GDP over the past decade.

Concerns over ‘chronic underfunding’

Concerns persist over chronic underfunding of state universities, delays in research grants, and irregular payment of PhD fellowships. Many academics argue that beyond new announcements, long-term financial commitment will ultimately determine the quality of higher education.

Achal Agrawal, founder of India Research Watch, told University World News: “While the budget announcements are positive, the real concern remains the condition of PhD researchers in India.”

According to an India Research Watch poll, 25% of PhD students receive less than INR10,000 (US$110) per month, while 14% do not receive any stipend at all. Delays in fellowships and research grants – sometimes exceeding a year – are common, he said.

“If India truly wants to attract and retain skilled research talent, increasing PhD stipends and ensuring timely disbursal must become a priority,” he added.

Five large university townships

One of the most significant announcements in the budget is the proposal to develop five large university townships along major industrial and logistics corridors.

While the budget documents do not yet provide a separate funding figure for these townships, their inclusion as a policy priority is clear.

While their specific locations and specialisations are also yet to be formally announced, the townships are envisioned not as conventional campuses but as integrated higher-education hubs that will bring together universities and colleges, advanced research centres, start-ups and innovation spaces, and direct linkages with industry.

The objective behind them is to reduce the gap between education, research, and employment, enabling students to align more closely with industry needs.

Dr Pushkar, director and chief executive of the International Centre Goa (ICG), a cultural institution that brings thought leaders together, said the proposed initiative is an important and timely announcement that deserves priority attention.

“What is being envisaged would be better described as knowledge or knowledge and innovation hubs. Given the pace of urban growth and the challenges of intra-city mobility, such clustered ecosystems are essential for meaningful integration of education, research and innovation,” he told University World News.

However, he added that the success of these hubs will ultimately depend on thoughtful planning and governance – covering green spaces, walkability, public transport, social infrastructure, and administrative autonomy – to truly inspire vibrant knowledge communities.

Experts believe that if these townships are granted sufficient academic autonomy, international partnerships, and long-term funding, they could make India more attractive to foreign universities and international students.

Critics, however, caution that an infrastructure-centric approach will remain incomplete unless equal attention is paid to faculty quality, research culture, and academic freedom.

Overseas education

Even as the government focuses on strengthening domestic higher-education capacity, it has also signalled that it does not intend to curb aspirations for overseas study.

Under the Liberalised Remittance Scheme (LRS), the Budget has reduced the Tax Collected at Source (TCS) on remittances for foreign education from 5% to 2%.

This decision is expected to reduce the upfront cash burden on students and families, ease pressure on education loans and household savings and make planning for overseas education more manageable.

Ravneet Pawha, vice-president for global engagement and CEO (South Asia) of Deakin University, said: “The budget sends a clear signal that India views education as economic infrastructure. The reduction in TCS on overseas education meaningfully lowers upfront costs at the decision stage and is likely to revive outbound student momentum.

“At the same time, sustained investments in higher education, AI, research and regional education hubs strengthen India’s global academic credibility and open new opportunities for international collaboration.

“The direction is clear; success will now depend on effective execution and responsive policies on both sides,” she told University World News.

Space science

Meanwhile, in a boost to India’s space dreams, the budget includes provisions for the establishment or upgrading of four major telescopes and astronomy facilities to support astrophysics and space science research.

Although a separate budget for these telescope facilities has not been announced, the Department of Space continues to receive sustained funding as part of the broader science and technology architecture that supports missions, satellites and research infrastructure.