Budget 2025: Can AI, IIT expansion, skill development bridge the learning gap?

With major allocations for IIT expansion, digital education, and medical training, the government is betting on systemic reforms to transform the education landscape. However, it does not adequately address early learning gaps that have persisted for decades. Increased allocations for IITs and skill development programmes are welcome, but bridging the gap between education and job-market needs requires deeper structural reforms. Similarly, while the Budget proposes cost-reduction measures, unless these reforms materialise, students will continue seeking affordable alternatives abroad.

School education and infrastructure investment

The school education sector has received a renewed push, with a sharp focus on infrastructure, digital learning, and teacher training. The Samagra Shiksha Abhiyan continues to be the backbone of school education, receiving Rs 4,971.81 crore to enhance foundational literacy, teacher effectiveness, and curriculum modernisation. The PM Schools for Rising India (PM SHRI) initiative, aimed at upgrading government schools with better facilities and teaching resources, has been allocated Rs 2,721.96 crore. Meanwhile, the Pradhan Mantri Poshan Shakti Nirman (PM POSHAN) scheme, which provides mid-day meals to schoolchildren, has been granted Rs 548.08 crore, ensuring nutritional support remains a key component in retaining students.

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Despite these investments, persistent challenges remain. India has 14.72 lakh schools serving 24.8 crore students, with dropout rates at different levels presenting an ongoing concern: 1.9% at the primary level, 5.2% at the upper primary, and 14.1% at the secondary level. While access to education has expanded, the quality of learning outcomes remains questionable. The ASER report underscores that only 50% of Class 5 students can read a Class 2 textbook, a glaring indication that increased budgetary allocation alone may not resolve the systemic deficiencies in early education. Infrastructure improvements, however, show steady progress. Data reveals that 97.2% of schools now have separate girls’ toilets, 91.8% have electricity, and 89% have libraries or reading rooms. While these developments improve the learning environment, the deeper issue remains the effectiveness of teaching methodologies and the urgent need to modernize pedagogy to enhance learning outcomes.

Higher Education: IIT expansion, AI integration, and medical training

The government’s push to make India a global education hub is reflected in a budgetary boost for premier institutions. The IITs have been allocated Rs 1,041 crore, while the National Institutes of Technology (NITs) and the Indian Institute of Science (IISc) have received Rs 5,687.47 crore. With three new Centres of Excellence in AI receiving a Rs 500 crore investment, the government is setting the stage for AI-driven learning and research, aligning with India’s long-term ambition to be a leader in AI and emerging technologies.

The expansion of universities in India has been unprecedented over the past decade. From 723 universities in 2014 to 1,213 in 2024, the 59.6% growth indicates a strong push for higher education accessibility. However, the challenge remains in ensuring these institutions offer industry-aligned courses and produce graduates who meet global employment standards.

Medical education, a sector that has witnessed rapid expansion, is another budget priority. The number of medical colleges has doubled from 387 in 2013-14 to 780 in 2024-25, while MBBS seats have surged from 70,012 (FY19) to 1,18,137 (FY25). Postgraduate medical education has also seen an exponential rise, with seats increasing from 39,583 (FY19) to 73,157 (FY25). Despite these developments, the high cost of medical education continues to push thousands of students toward foreign universities, a problem that the government aims to address through regulatory reforms aimed at cost reduction.

Skill development and employability

A central challenge for India’s higher education sector remains the stark gap between academic learning and employability. The 2024 employability report revealed that 80% of engineering graduates and 93% of MBA graduates lacked industry-relevant skills, making it imperative to integrate vocational training and skill-based learning into mainstream education.

To address this, the National Apprenticeship Promotion Scheme (NAPS) has received an Rs 1,178 crore allocation, ensuring that industries play a more active role in training students. The government has also prioritized PM eVidya, DIKSHA (Digital Infrastructure for Knowledge Sharing), and SWAYAM, which focus on digital education and online learning platforms. In a significant move, 10,000 Atal Tinkering Labs (FTLs) have been upgraded to include AI, blockchain, AR/VR, robotics, and cybersecurity training, ensuring that students are exposed to cutting-edge technologies from an early age.

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Industry-academia collaboration remains a crucial aspect of the government’s strategy. Universities and technical institutions are being encouraged to align their curricula with market demands, a step toward solving the employability crisis. However, while these measures signal progress, their implementation will determine the actual impact on job-readiness.

The budget lays the foundation for a more inclusive and future-ready education system, but its success depends on execution, accountability, and continuous policy refinements. If these ambitious reforms are implemented effectively, India could establish its position as a global knowledge hub. However, without focused efforts on bridging learning gaps and enhancing the quality of education, even the most well-intentioned Budget allocations may struggle to achieve their true transformative potential.