Union Budget 2025 paves way for a future-ready workforce through education, skilling, and AI innovation

In her eighth consecutive Union Budget (2025-26), Finance Minister Nirmala Sitharaman unveiled a series of initiatives aimed at boosting education infrastructure and skill development. These include expanding capacity in IITs and medical colleges and establishing a centre of excellence (CoE) in AI for education.

The proposed measures to invest in people and innovation are part of the ten broad focus areas outlined by the Finance Minister.

Capacity building

The Finance Minister proposed expanding infrastructure at five Indian Institutes of Technology (IITs)—Bhilai, Goa, Jammu, Palakkad, and Tirupati—established after 2014, to accommodate 6,500 additional students. She also announced plans to enhance the hostel and other infrastructure capacity at IIT Patna.

“Total number of students in 23 IITs has increased 100% from 65,000 to 1.35 lakh in the past 10 years,” the FM pointed out.

Welcoming the decision to enhance skilling and higher education infrastructure, Shantanu Rooj, Founder and CEO of TeamLease Edtech, said, “The government’s decision to expand credit-linked skilling initiatives, apprenticeship programmes, and higher education infrastructure is encouraging, but increasing seats in IITs alone may not deliver significant long-term benefits.”

Instead, the focus should be on improving the quality and outcomes of education in existing engineering and higher education institutions, making them sustainable and competitive, he added.

Apart from IITs, Sitharaman stated that 10,000 seats will be added in medical colleges and hospitals next year, as part of the broader goal of increasing capacity by 75,000 seats over the next five years.

The Finance Minister highlighted that, over the past decade, the government has added nearly 1.1 lakh undergraduate and postgraduate medical education seats, marking a 130% increase.

Prateek Maheshwari, Co-founder of PhysicsWallah, believes adding medical seats over five years is a crucial step towards reducing medical student outflow to other countries, given that over 23 lakh students appear for NEET, but only 1.1 lakh seats are available.

Focus on excellence and skill development

The Finance Minister also announced the establishment of a centre of excellence in artificial intelligence (AI) for education, with a total outlay of Rs 500 crore. This is in addition to the three CoEs in AI, focusing on agriculture, health, and sustainable cities, announced in 2023.

Siddharth Maheshwari, Co-founder of Newton School, believes Budget 2025-26 takes a decisive step in bridging India’s AI talent gap. He says the CoE in AI for education, along with the establishment of new National Centres of Excellence for skilling, underscores the urgency of building a future-ready workforce.

Building on the initiative from the July 2024 Budget, Sitharaman announced the establishment of five National Centres of Excellence for skilling, with global expertise and partnerships, aimed at equipping India’s youth with the skills necessary for the 'Make for India, Make for the World' manufacturing vision. The partnerships will cover curriculum design, training of trainers, a skills certification framework, and periodic reviews.

With a strong emphasis on skill development, the Finance Minister announced the establishment of 50,000 Atal Tinkering Labs in government schools over the next five years, aimed at “cultivating the spirit of curiosity and innovation” and “fostering a scientific temper among young minds.”

“The Union Budget announcement brings a much-needed focus on the future of our education sector, particularly through the establishment of 50,000 Atal Tinkering Labs. They will play a key role in nurturing a scientific temperament in young minds, fostering creativity and innovation from an early age,” said Jai Decosta, CEO of K12 Techno Services.

By prioritising hands-on learning through robotics and AI-driven programmes, these initiatives are set to empower students with critical thinking and problem-solving skills, preparing them to thrive in a technology-driven future, Decosta added.

Technology in education

Focusing on technology in education, the FM proposed the implementation of the Bharatiya Bhasha Pustak Scheme, which will provide digital Indian language books for school and higher education, helping students gain a better understanding of their subjects.

Anil Kapasi, Co-founder and Managing Director of Arihant Academy, believes the Bharatiya Bhasha Scheme will provide digital learning resources in multiple languages, break down language barriers, and promote inclusivity and a deeper understanding of subjects.

To promote greater accessibility in education, Sitharaman announced that broadband connectivity will be extended to all government secondary schools in rural areas under the Bharatnet project.

Broadband connectivity in secondary government schools can be a game-changer, enabling affordable, high-quality, and personalised digital learning solutions, noted PW’s Maheshwari.

These education and skilling-focused measures come at a time when there is an urgent need for upskilling initiatives and stronger collaborations between industry and academia to ensure a steady pipeline of job-ready talent for the future.

The Economic Survey 2024-25, which was released on Friday, emphasised that the primary challenge in the country is job creation. India needs to generate an average of 78.5 lakh jobs annually in the non-farm sector by 2030 to accommodate the growing workforce, a challenge also highlighted in the 2023-24 survey.