The education sector has got about nine per cent hike in the Interim Budget presented today by Finance Minister P Chidambaram, who also proposed a moratorium on repayment of education loans, benefiting nine lakh students.
The minister proposed a plan outlay of Rs 67,398 crore for the sector, out of which the higher education sector has been allocated Rs 16,200 crore and the school education department Rs 51,198 crore.
The hike proposed is 8.96 per cent compared to the revised estimate of Rs 61,857 crore in 2013-14.
With elections round the corner, Chidambaram sought to reach out to the students who have taken education loans to fund their studies, proposing a moratorium for all loans taken up to March 31, 2009 and outstanding ones up to December 31, 2013.
"It is estimated that nearly nine lakh student borrowers will benefit to the tune of approximately Rs 2,600 crore. I intend to provide the funds in the current financial year itself and Rs 2,600 crore will be transferred to the Canara Bank, which is the designated Central Scheme for Interest Subsidy (CSIS) banker," he said.
In 2009-10, the then Finance Minister Pranab Mukherjee had introduced CSIS in respect of education loans disbursed after April 1, 2009 under which the government took over the burden of interest for the duration of the period of study and a little more.
The scheme brought cheers to the students and their families.
"However, I have noticed a sense of discrimination among students who had borrowed before March 31, 2009 and straggled to pay interest during the period of study and continued to service the loans afterwards. I think they deserve some relief," he said while announcing the moratorium.
As of December 2013, public sector banks had 25,70,254 student loan account and the amount outstanding was Rs 57,700 crore.