Budget 2020 Expectations: Here’s what NBFCs, education financing companies are expecting from Budget

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Bank loans to NBFCs for onward lending to education sector should be granted or categorized as priority sector lending for banks.

Union Budget 2020 Expectations: The Union Budget 2020 is all set to be presented on 1 February 2020, and all eyes are now on the Government. Every sector is expecting deserving allocation in the budget, and similar to all other sectors, the education sector is also waiting for its share in the upcoming budget.

Among the many expectations from the union budget, from the education sector, increase in the education budget, creating more jobs, improving academic facilities, and reducing goods and service tax rates for online education, are some of the recent budget expectations.

As per the RBI norms, currently, on-lending for registered NBFCs (other than MFIs) towards agriculture, MSMEs and the housing sector, up to prescribed limits, are treated as priority sector loans. As per the current fiscal budget, NBFCs who specialize in education financing do not have such privileges. Amit Gainda, Chief Executive Officer, Avanse Financial Services, says “We are hoping this year’s budget offers better chances for the education lending companies. Bank loans to NBFCs for onward lending to education sector should be granted or categorized as priority sector lending for banks.”

The 2019 Interim Budget announced an increase of 10 per cent in the education budget, for nationwide academic development. Similar changes are expected which will bring in more financial support to the education sector. Bringing in more technology in the classroom environments and introducing AI (artificial intelligence) with mainstream education are some of the major changes that can be brought.

Gainda of Avanse Finance adds “Along with education, it is also important to grant infrastructure status to ‘Education Institutions’ as well.” This will allow the sector to offer education loans at lower ROI, thereby making quality education affordable and accessible for deserving Indian students. The education sector will also have easy access to capital, which will amplify the quality of infrastructure and educators, thereby enhancing the country’s economy and creating employment and business opportunity for the entire eco-system.

Additionally, the focus from the Government and easy availability of capital will induce an environment of innovation in the field of education, which can help bridge the demand and supply challenges in this sector. Industry experts add, skilled and educated Indian youth will provide as human capital that will multi-fold the progress of the country.

On the tax front, the government can reduce the taxes over online educational courses, from the current 18 per cent. This will help the education-technology sector to boost up and reach a broader region.