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Charu Sudan Kasturi, Hindustan Times
New Delhi, March 01, 2013
India's 3.5 crore taxpayers will keep the country's massive schooling system afloat this year despite unprecedented education budget cuts, because of increased collections through the dedicated education cess levied on their income tax.

Faced with the slowest rate of economic growth in a decade, finance minister P Chidambaram on Thursday slashed the government's budgetary allocations for the Sarva Shiksha Abhiyan (SSA), the flagship programme aimed at sending every child to primary school, for the first time since the programme was launched in 2001.

But a Rs. 2759 cr increase in the amount collected through the 2% elementary education cess levied on all income tax has helped bridge the reduced amount, mitigating the effects of cuts that could otherwise have significantly hurt schools already struggling amid rising prices.

Thanks to the cess, the total amount promised to the SSA in 2013-14 is Rs. 24,532 cr compared to Rs. 23, 036 cr in the financial year just concluding. Tax payers also shell out an additional 1% cess for secondary and higher education.

"The elementary education cess has saved us," a senior official and close adviser to Planning Commission deputy chairman Montek Singh Ahluwalia told HT on Friday.

"In 2013-14, more than ever before, it will be the direct contribution to the education cess from taxpayers that will hold up the country's schools and children."

The SSA and the Mid-day meal (MDM) - the world's largest school lunch programme - are directly believed responsible for hauling up India's elementary education enrolment from about 70% at the turn of the century to over 95% today. The MDM feeds over 100 million children daily.

Regular substantial hikes in the budgetary allocations for the SSA and the MDM during both the NDA years and under the two UPA terms meant that the two programmes had budgetary allocations of Rs. 8293 cr and Rs. 3708 cr respectively, in 2012-13.

But with the GDP braking to a 5% growth rate, the lowest since 2003, and a bloating fiscal deficit threatening to pull down India's investment ratings, Chidambaram Thursday cut the government's promised budgetary allocation for the SSA from Rs. 8293 cr in February 2012 to Rs. 8079 cr for the coming year.

The cap on subsidized LPG cylinders and persistent inflation, have together in recent months already pushed government schools to the brink. The human resource development (HRD) ministry has on multiple occasions asked - in futility -- the petroleum ministry to lift the LPG cap for schools.

Instead, it is the education cess that has come to the rescue of India's schooling system.

The estimated amount collected through the 2% cess - placed under a dedicated fund called the Prarambhik Shiksha Kosh (PSK) - that is promised for 2013-14 is Rs. 24,429 cr, up from Rs. 21,670 cr.

The amounts collected through the cess in the PSK - set up by the UPA in 2004 - can only be used for the SSA and MDM schemes.