Union Budget 2026: What the Economic Survey signals for India’s children

 Just before the Union Budget for FY 2026-27 is tabled in Parliament on February 1, the Economic Survey 2025-26 offers a timely assessment of India’s progress in education and health. Read alongside recent trends in public spending on children, it provides an opportunity to reflect on how fiscal priorities can be more closely aligned with the evolving needs of India’s young population.

Children and adolescents continue to form a substantial share of India’s demographic profile. Nearly 27 per cent of the population falls within the age group of 3 to 18 years, a proportion that will remain significant—above 20 per cent—for the next two decades. This projection places children at the centre of India’s long-term developmental prospects, making the nature and scale of public investment in them a matter of enduring importance.

A shifting fiscal signal

Over the past decade, the share of the Union Budget devoted to child-related schemes has shown a gradual decline. While allocations in absolute terms have increased, their proportion within the Union Budget has fallen from over 3 per cent (3.32 per cent in both 2016-17 and 2017-18, and 3.24 per cent in 2018-19) in the latter half of the previous decade to around 2.3 per cent (2.28 per cent in 2024-25 and 2.29 per cent in 2025-26) in recent years. This trend does not necessarily suggest diminished intent, but it does raise questions about whether fiscal priority has kept pace with demographic weight and growing developmental complexity.

Education: progress and persistence of gaps

According to the Economic Survey, India runs one of the world’s largest school systems, with 24.69 crore (246.9 million) students, 14.71 lakh (1.471 million) schools, and 1.01 crore (10.1 million) teachers. While enrolment has improved at early levels, the age-specific net enrolment ratio at the secondary level remains at 52.2 per cent, highlighting the need to retain students beyond Grade VIII.

A key issue highlighted by the Survey is the uneven distribution of schools across education levels. While 54 per cent of schools offer only foundational and preparatory education, just 17.1 per cent provide secondary education in rural areas. Urban areas, by contrast, have a higher share of secondary schools (38.1 per cent). This disparity limits rural students’ access to higher-level classes, resulting in transition losses, increased travel time, and higher dropout rates. These gaps point to the need for targeted financial commitment towards transport facilities and school infrastructure, particularly in rural and hard-to-reach areas.

There are other challenges as well. Expected years of schooling continue to hover around 13 years, below the national aspiration of at least 15 years outlined in the National Education Policy (NEP) 2020.

Budgetary patterns help illuminate this gap. While the Samagra Shiksha Abhiyan constitutes the largest component of child-related spending, actual expenditure has often fallen short of allocations. Strengthening secondary education outcomes may therefore depend as much on improving utilisation and targeting of funds as on increasing allocations, particularly for composite schools, hostels, and transport facilities in underserved regions.

Beyond classrooms: well-being and inclusion

The Survey also draws attention to aspects of schooling that are less visible but equally consequential. The PARAKH Rashtriya Sarvekshan 2024 shows that Grade III mathematics proficiency rose from 42 per cent in 2021 to 65 per cent in 2024, while language proficiency improved from 39 per cent to 57 per cent over the same period.

The Survey further reveals that only 35 per cent of schools accommodate children with special needs (CWSN), and just 38 per cent have trained teachers. Emotional well-being indicators are similarly concerning — only 55 per cent of students feel motivated to attend school, and less than half feel emotionally safe.

In contrast, budgetary allocations for child protection and care services account for a relatively small share of total child-related spending. This imbalance suggests scope for a more integrated approach, where investments in education are complemented by stronger attention to children’s emotional well-being, inclusion, and safety—conditions that underpin meaningful learning and retention.

Adolescents at the margins

One of the more striking findings of the Economic Survey concerns adolescents who are out of school. Nearly two crore (20 million) adolescents in the age group of 14 to 18 years are estimated to be outside formal education, with economic compulsions, access to education and socio-cultural obstacles are cited as key push factors.

NEP 2020 and the Sustainable Development Goal (SDGs, Goal 4: target 4.1) aim that, all children complete free, equitable and quality primary and secondary education with effective learning outcomes.

However, the latest UDISE+ data (2024-25) suggests that, while retention is high at the foundational level (98.9 per cent), it remains a critical challenge at the secondary level, where only 47.2 per cent of students manage to complete their schooling up to Grade XII. Similarly, though the status of girls’ enrolment and retention in school have majorly improved over the past few years, retention of girls at the secondary level (Classes IX to XII) is still a matter of concern.

Enabling adolescents — particularly girls — to complete their school education is not only a social imperative but also a strategic investment in the country’s economic future. Evidence shows that higher levels of girls’ education translate into a more productive workforce, increased labour force participation, improved health and nutrition outcomes, and stronger intergenerational gains. For the economy, this means higher inclusive growth potential, greater resilience, and more equitable development.

From a budgetary perspective, sustained investment in girls’ education yields long-term returns that extend far beyond individual empowerment. Ensuring that girls remain in school through secondary education and higher secondary education, therefore, is central to India’s pursuit of inclusive growth, where economic progress is both broad-based and durable.

Health, nutrition, and emerging risks

According to the Economic Survey, public investment in child nutrition and health has delivered important gains, including sharp reductions in mortality indicators. India has made significant progress, reducing maternal mortality by 86 per cent and under-five mortality by 78 per cent since 1990. These outcomes are closely linked to sustained investments in child nutrition-related schemes, which continue to command a substantial share of child-related spending, with actual expenditure often matching or exceeding budget estimates.

At the same time, the nature of nutritional and health challenges is changing. While calorie intake has improved, micronutrient deficiencies persist, and overweight and obesity among children and adolescents are on the rise. These trends underscore the need for nutrition strategies that emphasise diet quality, awareness, and healthy habits, particularly within schools.

The Survey also flags emerging concerns related to children’s growing digital exposure. With increasing access to smartphones and education-related transactions becoming increasingly online-dependent—India currently has around 97 crore (970 million) internet users, and smartphones are available in 86 per cent of households—risks linked to attention loss, compromised mental health, and psychosocial well-being are becoming more prominent. While these issues are not yet clearly reflected in budget structures, they point to areas where public policy and spending may need to evolve.

In this context, fiscal support from the government will be crucial to implement school-based and family-centric digital hygiene interventions, enabling children to thrive in safer digital environments and become confident and future-ready.

Aligning evidence and expenditure

Taken together, the latest Economic Survey and child budget trends over recent years suggest that India has laid a strong foundation for improving child-centric outcomes, while also underscoring the need for periodic reassessment and recalibration of fiscal priorities. Children’s needs evolve across life stages, and public spending must remain responsive to this progression.

As the Union Budget is framed, closer alignment between evidence and expenditure could help consolidate past gains. This may involve restoring the relative priority of child-related spending, improving utilisation of allocated funds, and ensuring a balanced focus across education, health, nutrition, and protection.

India’s demographic future will be shaped by how effectively today’s children are supported to learn, grow, and thrive. The Economic Survey provides a clear evidence base. The Budget now has an opportunity to respond with calibrated, forward-looking choices that recognise children not merely as beneficiaries of welfare, but as central stakeholders in the country’s development trajectory.

Puja Marwaha is the CEO, CRY – Child Rights and You

Views expressed are the author’s own and don’t necessarily reflect those of Down To Earth