RBI’s February 2026 Policy: A Delayed Response to Low Underlying Inflation and Sluggish Demand.....

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) decision on February 6, 2026, to maintain a status quo on the repo rate at 5.25% and retain a "neutral" stance, despite a challenging deflationary environment, represents a critical, albeit arguably delayed, acknowledgement of the "low inflation" problem. While headline inflation has shown signs of a slight uptick due to volatile precious metal prices, the underlying economic reality—when excluding gold and silver—is one of exceptionally benign price pressures and weak consumer demand, pointing to a need for continued monetary easing. The decision reflects an excessive, albeit cautious, focus on headline numbers, failing to address the acute need to stimulate spending and rectify the imbalances in supply and demand in the economy.

Low Inflation and the "Ex-Gold/Silver" Reality

The core issue facing the Indian economy in early 2026 is that inflation has consistently operated well below the 4% target. While the RBI projected CPI inflation for FY26 at 2.1% (up from 2.0%), the underlying, or "core," inflation remains exceptionally low, suggesting that the economy is facing a deflationary, rather than inflationary, pressure. The "headline" numbers have been artificially elevated by a sharp surge in gold and silver prices (36% year-on-year in some segments), which are essentially safe-haven investments rather than consumer goods demand. When excluding these components, the underlying price pressures are extremely subdued, bordering on deflationary in some sectors, suggesting the RBI is overreacting to volatility in precious metals.

Delay in Addressing Spending and Demand

The refusal to cut rates is a failure to address the sluggishness in consumer demand. While GDP growth is projected at a robust 7.4% for FY26, this number is heavily supported by government-led capital expenditure rather than widespread private consumption. Urban consumption, in particular, remains weaker than rural consumption, which has only recently shown signs of recovery. The continued high cost of credit, which has not fully transmitted to the final consumer despite 125 bps of easing throughout 2025, is limiting spending. The RBI's "wait-and-watch" approach is a significant delay in acting, as the "real" interest rate remains elevated, hindering economic velocity.

Supply and Demand Mismatch

The current economic conditions are characterized by a supply-side that has recovered well—supported by favourable monsoons and high production—outpacing the demand-side, which is lagging. The economy has seen a "Goldilocks" scenario turn into a "weak-demand" scenario, where the supply of goods is ample (keeping food inflation low), but consumer purchasing power, especially in urban areas, is not keeping pace. The RBI's decision to pause, thus, fails to address this structural weakness. A cut in the repo rate would have lowered the cost of credit, boosting consumption and helping to bridge the gap between strong supply and weak consumer spending.

In conclusion, the RBI’s decision to keep the repo rate at 5.25% in February 2026 is a "wait-and-watch" approach that acts as a delay in addressing the core problem of low, non-commodity-driven inflation and the need to boost consumption. By focusing on headline CPI, which is distorted by gold prices, the MPC is overlooking the underlying deflationary pressures that require a more accommodative stance. With private demand still weak and supply conditions strong, the status quo acts as a drag on economic potential, delaying the necessary stimulus to make growth more inclusive and robust. The decision is a "delayed acceptance" of the low-growth-demand reality, prioritizing a rigid inflation target over a needed boost to spending.

The Paradox of Rate Cuts: Why Below-Target Inflation and High Real Rates Demand Policy Easing.....

When central bank inflation targets are set, they are generally intended to provide a stable, small positive buffer to encourage spending and prevent deflationary spirals, usually around 2% to 4% depending on the institution. A situation where inflation and expectations are running at 2%—significantly lower than a 4% target—creates a scenario of high real interest rates that can stifle economic activity. Despite the conventional view that rate cuts stimulate spending, the prevailing economic conditions, characterized by high nominal rates (e.g., 5.25%) relative to low inflation (2%), create a "real" interest rate that is higher than the long-run neutral rate. Consequently, this environment raises expectations for rate cuts, which are ironically necessary to prevent a, or, paradoxically, to reinforce, a, or delay in, spending, ultimately preventing inflation from falling further.

The Dynamics of High Real Rates and Low Inflation

In this scenario, inflation and its expectations have anchored at 2%, which is 2 percentage points below the 4% target. According to the Fisher Equation, the real interest rate is calculated as the nominal interest rate (5.25%) minus inflation (2%), resulting in a real rate of 3.25%. If the long-run neutral rate (the rate that neither speeds up nor slows down the economy) is 2%, a real rate of 3.25% is significantly contractionary. This means money is expensive, making borrowing costs for consumers and businesses high.

When inflation is this low (or falling), the real value of debt increases. Savers benefit, but borrowers are penalized, leading to a reduction in consumption and capital expenditure. The high real rate acts as a barrier to investment. As seen in recent economic data, when inflation drops below the central bank’s target range, the real policy rate becomes too restrictive, often acting as a drag on private investment and overall economic growth.

Why Rate Cut Expectations Rise

With inflation running well below the 4% target, the central bank’s monetary policy is deemed too tight. The primary mandate of most central banks is to keep inflation around their target; thus, inflation at 2% versus 4% indicates an over-tightening of policy. Market participants and analysts therefore increase their expectations for rate cuts to bring the real rate back down closer to the neutral rate (2%).

The high real rate (3.25%) represents a "drag" on the economy. To prevent inflation from falling further, or potentially entering a deflationary spiral where consumers delay spending in expectation of lower future prices, rate cuts are necessary to incentivize economic activity. Furthermore, when inflation falls below targets, central banks must act to prevent "low inflation traps" which can lead to weak demand and, ironically, even lower inflation in the future.

How Rate Cuts Reinforce Spending

Cutting the 5.25% nominal rate, for instance, to 4.5% would immediately lower the cost of borrowing. This eases the burden on households and businesses, encouraging increased, rather than delayed, spending. If the 3.25% real rate is currently causing a slowdown, a reduction in the nominal rate reduces this real burden, boosting consumption and investment.

The delay in spending occurs when real rates are high because the cost of capital is prohibitive. By lowering the nominal rate, the central bank reduces the real rate (nominal rate - inflation), thereby reducing the cost of borrowing, which should boost investment and consumption, making loans more affordable. Therefore, contrary to the fear that rate cuts might not immediately spark spending, they are necessary to remove the high-cost barriers that are causing the delay in the first place.

A situation where inflation (2%) is significantly below a 4% target means that a 5.25% nominal rate produces a high real interest rate, which is restrictive. This high real rate (3.25%) is far above the estimated 2% neutral rate, which causes a, or, paradoxically, to reinforce, a, or delay in, spending, ultimately preventing inflation from falling further. The resulting economic slowdown drives expectations for rate cuts. These cuts are designed to reduce the high real cost of borrowing, encouraging consumption and business investment, thereby preventing the economy from falling into a low-inflation, low-growth trap, or, or, paradoxically, to reinforce, a, or delay in, spending, ultimately preventing inflation from falling further. Thus, rate cuts in this scenario are essential to re-accelerate spending and bring inflation back up to the target.

The Great Pivot: Modi’s Strategic Shift from Moscow to Washington.....

In a move that has sent shockwaves through global energy markets and reshaped geopolitical alliances, Prime Minister Narendra Modi has reportedly agreed to halt oil imports from Russia. This dramatic reversal comes after months of Indian reliance on discounted Russian crude, which surged to nearly one-third of India's total imports in 2025. The sudden pivot, likely precipitated by crippling U.S. tariffs on Indian goods and a strategic reassessment of economic gains, signals a pragmatic,, "India-first" foreign policy that prioritizes long-term economic stability over short-term discounted energy gains.

The Economic Logic: Losses and Gains

1. The "Loss" of Russian Oil (High Costs and Risk):

While initially seen as a bargain, Russian oil became increasingly costly due to, ironically, its own success.

Sanctions Pressure: Tightening U.S. and European sanctions on major Russian producers made it harder for Indian refiners to manage compliance risks.

Rising Costs: Shipping costs and insurance for Russian oil increased, and, by late 2025, the logistical nightmare was reducing the value of the "discount".

Tariff Penalties: The U.S. imposed a 25% tariff on Indian goods, specifically targeting India's continued purchase of Russian oil.

2. The "Gain" from Exports (Turning Oil into Opportunity):

India emerged as a crucial global supplier of refined products, with petroleum product exports touching record highs in 2025.

The Refinery Pivot: Indian refiners like Reliance Industries and MRPL, which possess sophisticated, flexible technology, moved away from relying solely on Russian feedstock to diversify their sources.

Record Exports: Despite sanctions, India managed to increase its refined product exports to the U.S. and Europe, benefiting from elevated refining margins caused by global supply disruptions.

Market Diversification: India utilized the shift to secure new export markets, with refined product exports to countries like the US and Australia growing, ensuring higher export revenue.

Precedents of Pragmatism

This is not the first time India has shifted its foreign policy based on changing economic realities:

1991 Economic Reforms: India abandoned its socialistic, Soviet-aligned economic model for liberalization following a balance-of-payments crisis.

The 2008 Civil Nuclear Deal: India moved away from its traditional non-aligned stance to develop a strategic partnership with the United States, prioritizing energy security.

2020 Border Standoff: Following the Galwan Valley clash, India immediately banned over 200 Chinese apps, demonstrating a willingness to sacrifice economic ties for national security interests, similar to the current decision to reduce reliance on Russian energy.

The New Narrative: "India-First"

The narrative surrounding this pivot is not one of "bowing to pressure," but of calculated, pragmatic sovereignty.

Energy Security: The government can argue that "securing energy" now means diversifying suppliers (USA, Venezuela, West Asia) rather than relying on a single, sanctioned source.

Economic Growth: By removing the 25% U.S. tariff, the move protects critical Indian industries like textiles and pharmaceuticals, which were threatened by the tariffs.

Geopolitical Balancing: The move keeps the U.S. relationship steady while allowing India to maintain a "friendship" with Russia, a vital defense partner, without being caught in the sanctions crossfire.

Prime Minister Modi’s agreement to halt Russian oil imports represents a masterful, albeit sudden, recalibration of India's foreign and economic policy. By recognizing that the "loss" of cheaper oil was becoming a greater financial burden—due to trade tariffs and sanction risks—than the "gain" from refined exports, the administration has chosen to pivot towards the U.S. and diversified energy sources. This move, echoing historical precedents of pragmatic decision-making, reasserts India's role as a sovereign, self-interested global power, maneuvering through the complexities of a new cold war to secure its economic future.

The 2026 India-US Trade & Energy Accord: Navigating Geopolitics and Economics.....

In a major realignment of global energy and trade, India and the United States finalised a comprehensive trade and energy agreement on February 2, 2026. This deal, announced following a high-level conversation between US President Donald Trump and Indian Prime Minister Narendra Modi, brings an end to months of heightened trade tensions and punitive tariffs. The core rationale of this deal is to trade India’s commitment to halt, or significantly reduce, its purchases of Russian crude oil—a major source of tension—for relief from steep US tariffs on Indian goods. This agreement marks a critical shift in India’s foreign policy, aiming to strengthen strategic ties with the US while managing the economic implications of moving away from discounted energy sources.

Rationale of the Trade Deal: The "Oil-for-Tariff" Exchange

The primary driver behind this deal is the intense diplomatic pressure from the Trump administration regarding India's import of Russian crude oil, which had served as a vital, cheaper alternative for India since 2022.

Tariff Relief: In 2025, the US had imposed punitive tariffs, pushing the total duty on Indian exports to nearly 50% (combining a 25% "reciprocal" tariff and a 25% "penalty" for Russian oil purchases). The 2026 deal slashes these tariffs on Indian goods to 18%, providing massive relief to Indian manufacturers, particularly in sectors like textiles, gems and jewellery, and pharmaceuticals.

The Russian Oil Constraint: The US has linked this tariff rollback directly to India’s commitment to cease or severely curtail its purchase of Russian oil. While Russia was a top supplier (peaking at ~40% of India's imports in 2025), the US aims to shrink Russia's war chest.

Strategic Pivot: As part of the deal, India has agreed to significantly increase imports of American energy products, including oil and liquified natural gas (LNG), and potentially explore other suppliers like Venezuela.

Impact on India’s Oil Imports

The shift away from Russian oil will significantly alter India’s energy import basket.

The Transition from Russia: Russian oil, which was often purchased at a discount (sometimes up to $10-$20 less than Brent), helped keep domestic fuel prices stable. The 2026 agreement implies a sharp reduction, or "winding down," of these imports, which had remained high at around 1.1 million barrels per day (bpd) in early 2026.

Increase in US/Other Imports: India is expected to shift to alternative suppliers, primarily the United States, whose imports to India had already risen by over 92% (April-November 2025) even before the deal. India has also committed to purchasing approximately 2.2 million tonnes of LPG from the US in 2026.

The "Buy American" Commitment: India has pledged to purchase over $500 billion worth of US goods, including energy and agricultural products, over the coming years.

Economic Impact on India: Domestic Oil Prices and Gains

The deal brings both immediate gains and potential long-term risks.

Impact on Domestic Oil Prices: Replacing discounted Russian crude with US or Middle Eastern crude might increase India's annual oil import bill by roughly 5-10% ($9–11 billion). This higher cost could exert pressure on domestic fuel prices if global prices rise. However, the reduction of import tariffs to 18% offers significant cost savings that might balance out the increased energy import costs.

Gains in Trade and Economy: The primary gain is the 18% tariff, which makes Indian goods more competitive in the US, India’s largest market (21% of total exports). The deal is expected to boost India's GDP by improving the competitiveness of labor-intensive industries.

Stabilising the Rupee: The removal of trade uncertainty and the reduction in punitive tariffs are likely to stabilize the Indian Rupee and encourage foreign institutional investor (FII) inflows, which saw outflows in 2025.

Historical Comparison

2022-2025 (The Russian Discount Era): Russia was a negligible supplier before 2022. Following the Ukraine conflict, Russia became a top supplier, often providing crude at significant discounts, shielding India from high global prices.

2026 (The US Partnership Era): The 2026 deal mimics the 2019-2020 era of high-pressure negotiations but results in a deeper, more structured partnership. It moves India from a "beneficiary of Russian, discounted oil" towards "secure energy supply from the Western hemisphere".

The 2026 India-US trade deal is a strategic compromise that favors long-term, stable trade relations over short-term energy cost savings. While the abandonment of discounted Russian oil poses a risk of rising import bills and potential inflationary pressure on domestic fuel prices, the significant reduction of US tariffs to 18% is a major win for Indian exporters. The deal ensures that India remains a favoured, high-growth partner for the US, positioning it to benefit from shifting global supply chains, while simultaneously securing its energy needs through diversified, though potentially more expensive, sources. The success of the deal will depend on the final implementation of the "Buy American" commitments and the ability of the Indian economy to navigate the transition away from Russian oil.

Union Budget 2026–27: A Non-Expansionary Blueprint for Self-Reliant Growth.....

Introduction

The budgetary highlights for 2025-26 and 2026-27 indicate a tightening fiscal policy aimed at reducing the fiscal deficit from 4.4% to 4.3% of GDP and lowering the debt-to-GDP ratio from 56.1% to 55.6%. Total expenditure shows controlled growth, with capital expenditure receiving a continued push, while the Education and Health Ministries see higher budgetary allocations. According to budgetary highlights for 2025-26 Revised Estimates and 2026-27 Budget Estimates, the government plans fiscal consolidation by targeting a reduction in the fiscal deficit and debt-to-GDP ratio while maintaining increased total and capital expenditure. Allocations for the Education and Health Ministries are also projected to increase.

Presented by Finance Minister Nirmala Sitharaman on February 1, 2026, the Union Budget 2026-27 (FY27) arrives at a critical juncture of global uncertainty and India’s 'Viksit Bharat 2047' vision. Facing pressure from persistent rupee depreciation (staying above 90-mark) and the need to curb inflationary pressures (2% retail inflation target in FY26), the budget is fundamentally non-expansionary. It shifts the focus from government-led spending to private sector investment, prioritizing fiscal consolidation (4.3% deficit target) and debt management (aiming for ~50% debt-to-GDP by 2031).

1. The Core Context: Inflation, Depreciation, and Debt Worries

The 2026 Budget was drafted under the shadow of significant external shocks and internal fiscal constraints:

Inflationary Pressures: While headline inflation moderated, the budget recognizes the need to maintain a "tight" fiscal policy to prevent resurgence.

Depreciation & Capital Outflow: The rupee faced depreciation (4.9% decline as of Jan 2026), partly due to net portfolio outflows, requiring policy stability to restore investor confidence.

Fiscal Deficit & Debt: The government met its promise of reducing the deficit below 4.5% in FY26, and in FY27, the target is tightened to 4.3% of GDP. The debt-to-GDP ratio is projected to decline to 55.6% in FY27 from 56.1% in RE 2025-26, signaling a commitment to long-term stability rather than short-term stimulus.

2. A "Non-Expansionary" Stance: Numbers and Analysis

Contrary to typical pre-election or popular budgets, Budget 2026 is cautious.

Total Expenditure: Estimated at ₹53.5 lakh crore, growing at a moderated pace to avoid overheating the economy.

Tax Structure: The new Income Tax Act, 2025 comes into effect, encouraging compliance rather than reducing rates, with minimal changes to personal income tax slabs.

Precedent: This follows the trend of "fiscally responsible" budgets initiated in 2021-22, focusing on quality of expenditure (capex) rather than quantity (subsidy).

Example of Control: Revenue expenditure and non-essential spending are tightly controlled, with subsidies rationalized to keep the deficit in check.

3. Crowding In Private Sector Investment

With public debt worries, the government’s mantra is to "crowd in" private investment through policy support, infrastructure, and de-risking:

Infrastructure Risk Guarantee Fund: Introduced to reduce risks for private developers, especially in the construction phase.

Infrastructure Spending (Capex): Public capex continues to grow (to ₹12.2 lakh crore, or ~3.1% of GDP), but it is focused on catalyzing larger private participation.

Manufacturing Focus (ISM 2.0): India Semiconductor Mission 2.0 launched, with a ₹40,000 crore outlay for electronic components to boost private, high-tech manufacturing.

Ease of Doing Business: Introduction of a single, interconnected digital window for cargo clearance, and a "Corporate Mitras" program to help MSMEs with compliance.

4. Expenditure on Education, Skills, and Health

The budget prioritizes human capital, but with a focus on efficiency and digital integration.

Education: Total allocation for the Ministry of Education rose to ₹1.39 lakh crore for 2026-27.

Key Focus: The budget signals a shift from mere outlays to outcomes, focusing on implementing the National Education Policy, with a focus on five new university townships and AVGC (Animation, Visual Effects, Gaming, and Comics) labs in schools.

Skills & Employment: A major focus on upskilling, with the Skill India program receiving a dedicated push to enhance employability. A new 12-week training course for 10,000 tourist guides is a key example.

Health: The Ministry of Health and Family Welfare was allocated ₹1.06 lakh crore, a nearly 10% rise over the Revised Estimates of FY 2025-26.

Key Focus: Setting up a new NIMHANS-2 and upgrading national mental health institutes in Ranchi and Tezpur.

Conclusion

The Union Budget 2026-27 is a pragmatic, non-expansionary, and stability-focused document. It successfully balances the urgent need for fiscal consolidation and inflation control with the requirement for long-term growth through capital expenditure. By lowering the fiscal deficit to 4.3% and targeting a lower debt-to-GDP ratio, it aims to create a stable environment for the private sector to lead the next phase of India’s economic growth, while making targeted, high-efficiency investments in education, health, and skill development to enhance long-term productivity.

The Escalating Cost of Knowledge: Education Inflation vs. Public Expenditure.....

Introduction

Education inflation in India is experiencing a significant, rapid surge, with costs for school and higher education doubling approximately every 6 to 7 years. While general consumer price inflation (CPI) hovers around 5–6%, education inflation often ranges from 8% to 12%, outpacing standard cost-of-living increases. This scenario poses a critical challenge to the affordability of quality education, creating a scenario where public spending must either increase exponentially or result in a growing dependence on private household funding.

Pace of Public Spending vs. Education Inflation

Education Inflation Rate: Costs are doubling every 6–7 years due to factors like increased tuition fees (8–12% annually), high operating costs for private institutions, and rising expenses for materials and technology.

Public Spending Trend: Public expenditure on education in India has remained relatively stagnant as a percentage of GDP, hovering around 4% (3.6%–4.6% in recent years). While total public expenditure increased from Rs. 22,393 crore in 1991-92 to over Rs. 10.9 lakh crore in 2022-23 (in nominal terms), it has not consistently outpaced the accelerated inflation of education costs.

Comparison: If education inflation doubles costs in ~6 years (approx. 12% CAGR), public expenditure must also increase by 12% annually just to maintain the same real-value service level. If public spending lags behind this, the real purchasing power of public education funds is declining, requiring households to bridge the gap through private spending.

Is Public Spending Keeping Pace?

Public spending is not keeping pace with the rapidly rising cost of education.

Private vs. Public Surge: Private expenditure on education in India increased from Rs. 9,667 crore in 1991-92 to over Rs. 7.28 lakh crore by 2022-23. The share of private expenditure has consistently grown, with households in urban areas increasingly relying on private schools, where costs can be over 10 times higher than government institutions.

Stagnant GDP Share: Despite the 6% target set by the 1966 Kothari Commission, public spending has failed to cross that mark, staying below 5% for decades.

Conclusion on Relevance: The rising cost of education has made it the largest expense for many families after housing, indicating that private costs are outpacing public investment in quality, creating a "complementary" relationship where households must spend more to fill the void left by public funding.

Long-Term Implications

Increased Financial Strain on Households: Families must allocate a massive 40–80% of their income to education in some cases, forcing them to exhaust savings or take on high-interest loans.

Higher Education Debt: The reliance on education loans is increasing, which may reduce future consumer spending and financial stability for graduates.

Inequality in Access: Quality education is becoming a luxury, with elite private institutions becoming inaccessible to lower- and middle-income families, deepening socioeconomic disparities.

Shift in Priorities: Parents are delaying retirement planning and home purchases to manage tuition fees, which could lead to long-term economic instability for households.

Quality Gap: If public spending remains stagnant while inflation hits 10–15% in the private sector, public institutions may struggle to keep up with necessary technological and infrastructure upgrades, creating a two-tier system.

Conclusion

The rapid doubling of education costs every 6 years far exceeds the pace of public spending, placing immense pressure on households. As education inflation continues to outpace general inflation, the reliance on private funding has increased, turning education from a public good into a significant financial burden. Without a dramatic increase in public investment to match this inflationary pace, the long-term, structural, and social implications point towards increasing educational inequality and a high-debt scenario for households.

The Silent Crisis: Why Education Inflation in India Outpaces General Price Rise.....

Introduction

While the headline Consumer Price Index (CPI) in India has recently shown moderation, hovering around 4-5% (with some months in 2025 showing even lower figures), a quiet crisis is brewing in the education sector. Education inflation in India is significantly higher than the general inflation rate, with costs for schooling and higher education escalating by approximately 8-12% annually. This aggressive rise means that, without proper financial planning, the cost of education is poised to double approximately every 6-7 years, turning what was once a manageable expense into a massive financial burden for families.

Data and Comparison: Education vs. General Inflation

To understand the gravity of this, one must compare the general cost of living with the specific cost of education.

General CPI Inflation (2025): Frequently fluctuating between 3% and 5%.

Education Inflation: Consistently ranging between 8-12% annually.

The Doubling Effect: At an 8% inflation rate, a ₹10 lakh expense doubles in about 9 years. At 12%, it doubles in just 6 years.

Long-term Example: A four-year engineering course costing ₹4 lakh today could reach ₹40 lakh in 15 years, assuming a 6-8% inflation rate, rising to nearly ₹50 lakh at higher rates.

According to reports, urban private unaided school fees have increased by over 169% in the last decade, far outpacing general wage growth. Even in cases where CPI is low, education expenses remain sticky and elevated.

Key Drivers of High Education Inflation

The rapid increase in education costs is fueled by both demand-side,, behavioural shifts and supply-side,, structural factors.

1. Growing Demand for Premium Private Education

There is a profound shift in consumer behavior in India. Parents increasingly prefer private schools and universities over public institutions, viewing them as essential for better quality, superior infrastructure, and international curriculums. This high demand allows private institutions to hike fees almost at will.

2. Infrastructure and Technology Upgrades

Modern education demands more than just classrooms. Private institutions are investing heavily in smart classrooms, advanced laboratories, digital tools, and superior sports facilities. These capital expenditures are passed directly onto parents, contributing to the 8-12% annual hike.

3. Rising Operational Costs

Recruiting and retaining high-quality teachers in a competitive market requires significantly higher salaries. Furthermore, costs associated with digital learning tools, software, and international accreditations add another layer of expense to the fee structure.

4. Hidden Costs and Monetization of Education

Beyond tuition fees, costs for extracurricular activities, transportation, uniforms, and "one-time" fees (like development charges) are growing faster than inflation. Some private schools have been known to raise fees by over 15% annually to cover these "hidden" expenses.

Impact on Families and Financial Planning

The disparity between income growth and education inflation means families are increasingly forced to:

Dip into savings: A 2021 survey showed 60% of parents were dissatisfied with rising costs.

Take Loans: Outstanding education loans in India reached ₹1.36 lakh crore in 2024.

Sacrifice other goals: Many families are forced to delay retirement planning or home purchases to fund their children's education.

Conclusion

Education inflation in India is a formidable challenge, operating at a rate that is nearly double the general inflation rate. Driven by the demand for premium education and rising operational costs, it is transforming education into a, high-cost commodity. While the government attempts to regulate fees, the reality is that parents must adopt proactive financial strategies—starting early, investing in growth-oriented instruments like Equity SIPs, and planning for a future where education costs double every few years. Without this foresight, the dream of quality education could become unaffordable for the average Indian household.