HRD ministry and states can be happy as 13th Finance Commission has been the most generous for elementary education, allocating Rs 24,068 crore for Sarva Shiksha Abhiyan to all the states for the next five years. It has also fully accepted the demand for grants made by the HRD ministry. 

   Even though funding for Right to Education has not been worked out, the Commission recognizes that more funds will be needed to implement the historic legislation. It is clear that SSA will be the main vehicle for implementing the RTE Act. 

   Two things about education in the report stand out. One, unlike the 12th Finance Commission that allocated funds for only eight states, this time the Rs 24,068 crore has been provided for all the states. The fund to be disbursed over the next five years is part of the equalisation grant to all states which will be equivalent of 15% of the assessed requirement. It will take care of the recurring expenditure that SSA incurs in terms of salary, training and similar other heads. But capital expenditure has to be left out of it. 

   Considering that 14 states defaulted on their share of 40% for SSA last year, it is unlikely that they will be able to increase it to 45% as is required from the next fiscal. Nevertheless, more devolution of funds will help states tide over that crisis. 

   While being generous in grant of funds, the Commission has made it clear that it should not become a substitute for current expenditure of states. It has stipulated that the expenditure (excluding Rs 24,068 crore) should grow by at least 8%.      The second highlight on education is contrary to the Planning Commission’s argument that states are flush with funds  for SSA and even RTE, the Commission recognizes that implementation of RTE Act would require considerable increase in the funding requirements for elementary education. The report points out the divergent view on RTE funding between HRD ministry and Planning Commission. While HRD has projected a requirement of Rs 1.73 lakh crore, the Plan panel brought it down to Rs 1.44 lakh crore. 

   On the flip side, the states’ demand for sharing of 2% education cess has not been accepted. Education cess on indirect tax will be subsumed under the basic rate of central Goods and Services Tax. However, education cess on direct tax may continue. But states will still not get anything.