A case for an increase in education budget

Nepal's government is finalizing its federal budget, with expectations of significant changes, particularly in education spending. Despite international commitments to allocate 20 percent of the national budget or 5 percent of GDP to education, successive governments have fallen short. The education budget has consistently remained around 10-11 percent of the national budget and less than 3 percent of GDP, although it represents the highest allocation among ministries.

Since fiscal year 2011-12, when the education budget peaked at 17.1 percent of the national budget, there has been a steady decline. In the current fiscal year, the allocation stands at Rs 211.17 billion, or 10.75 percent of the national budget, a slight decrease from the previous year. This trend contrasts with UNESCO's 2024 report, which emphasizes a paradigm shift toward prioritizing education investment and ensuring equitable resource distribution to achieve Sustainable Development Goals by 2030. Notably, 34 percent of countries, including Nepal, have not met the benchmarks of allocating 4-6 percent of GDP and 15-20 percent of the national budget to education.

Studies indicate that approximately 90 percent of Nepal's education budget is consumed by teacher and staff salaries. This leaves limited resources for enhancing the quality of education and improving learning outcomes. Some schools receive as little as Rs 50,000 annually for critical resources like laboratory equipment or library materials. The consequences are evident in declining educational quality, with the National Assessment of Student Achievement showing overall student learning at around 50 percent. Recent School Education Examination reports also highlight weak learning outcomes.

Compounding these issues, the Economic Survey for fiscal year 2025-26 reveals a worrying trend of student dropout rates. A key factor contributing to this is a lack of confidence in employability after graduation, signaling deeper concerns about the quality of education provided. Improving educational outcomes necessitates substantial investment in research, academic institutions, teacher recruitment and training, curriculum updates, and adequate resources, including digital tools.